REDUCED crime levels and economic stabilisation led to greater optimism among consumers and maintained levels of confidence among business owners during the latest confidence surveys.

According to the Jamaica Chamber of Commerce’s (JCC’s) Conference Board, during the third quarter of 2010, consumer confidence rose to its highest level since the close of 2008 while business firms maintained their optimism about future economic prospects, “although they revised downward their assessments of current economic conditions to a small extent”.

The index of consumer confidence rose to 109.8 in the third quarter of 2010, up from 102.1 in the second quarter and 105.5 in last year’s third quarter. The index of business confidence was 113 in the third quarter 2010 survey, slightly below the 114 in the second quarter, and well above the 101 recorded a year earlier.

“Although few consumers reported recent gains in the overall economy, many more think the economy has begun to stabilise,” said the survey report. “Importantly, consumers viewed the stabilisation of the economy as well as the reduction in crime as hopeful signs that the economy will expand in the year ahead.”

Only eight per cent of all Jamaicans thought that the economy had already improved in the third quarter of 2010 and 26 per cent anticipated that it would post gains during the year ahead, but individuals that expected the economy to worsen fell to 38 per cent in the third quarter, down from 51 per cent at the start of 2010, falling to the lowest level recorded during the past two years.

“This was the longest and bleakest assessment of the current job situation ever recorded,” said the survey report, but when asked about future job prospects 23 per cent expected job prospects to improve in the year ahead in the third quarter.

Increases in household income during the year ahead were expected by 32 per cent of all consumers — barely above the 30 per cent in the prior quarter. “Just three years ago, in the third quarter of 2007, 60 per cent expected their income to increase,” said the report.

Still, spending plans have posted small increases since the start of 2010, and were generally above last year’s levels.

“Ongoing changes in government economic policies as well as the global recovery were cited as positives for the Jamaican economy as frequently they mentioned their impatience with the pace of improvement,” said the report of businesses.

“Importantly, when firms were asked to identify the major problems facing the country, the proportion that mentioned crime and violence plunged to 53 per cent from 82 per cent last quarter.

“Overall, firms recognise that they now face the best opportunity to improve economic and social conditions, and are fully aware that the overhaul of the economy will not be costless.”

During the review quarter, firms have continued to underestimate the length and extent of the downturn in domestic demand, the length of time it would take to implement the new government policies, and the lag before business conditions would benefit from the changes in fiscal and monetary policies.

The report also showed:

* Better economic conditions were anticipated by 46 per cent of all firms, just below last quarter’s 52 per cent;

* Positive investment plans were cited by 40 per cent of firms, just below the 41 per cent in the previous quarter; and

* Higher profit margins during the year ahead were expected by 46 per cent of all firms, up from 42 per cent in the prior quarter, regaining last year’s level.

“Despite the bounce back, profit expectations were well below the average levels in the past decade, as firms reported prices were less likely to increase in 2011,” added the report.