Business optimism rose to the highest level since the third quarter of 2007, when the ruling political party took over the administration of the Government, while consumers held a bleaker view of economic circumstances in the last quarter of 2010 than the one before.

Even while consumer confidence remained in the doldrums in which it has been since the Government changed, very few Jamaicans — less than one in 20 — cited poor leadership of the Government as a reason for the current state of the economy, while many businesses had uncertainty about ongoing changes in government policies as well as the global recovery.

According to the Jamaica Chamber of Commerce’s (JCC’s) Conference Board (JCB) surveys of business and consumer confidence, the index of business confidence was 118.9 in the fourth quarter of 2010, up from 113 in the third quarter and above the 106.6 in the fourth quarter of 2009.

The index of consumer confidence was 107 in the fourth quarter of 2010, compared to 109.8 in the previous quarter and 102.1 a year earlier.

Going into 2011, consumers did not expect that all the “costs of the transition to healthier economic environment to have already been incurred or that the full transition will be completed anytime soon”, while businesses “recognise that social and economic conditions will slowly improve and displayed a growing acceptance that the change will not be costless”.

But unlike businesses that “remain convinced the economy is headed in the right direction”, consumers expect difficult times in the years ahead.

The 20 per cent decline in optimism among residents of tourist areas was too high to be offset by the rise in consumer confidence in non-tourist areas, which in the last quarter of 2010 reached a two-year high.

The decline reflected deepening concerns over future economic conditions for which only one in seven residents in tourist areas believed would improve.

Far more persons in non-tourist areas believe economic circumstances will improve — one in four — but overall, the data still point toward continued weakness in consumer spending.

Purchase plans for vehicles fell to 15 per cent of all consumers in the fourth quarter, down from 21 per cent in the previous quarter, while planned home buying and vacations were each one percentage point below the previous quarter — 10 per cent and 30 per cent of all consumers , respectively.

Underpinning the poor outlook for economic conditions, are job scarcity and low income expectations, which fell to the lowest in decades with only 25 per cent of households expecting an increase in earnings.

According to the JCB’s summary “for the fifth consecutive e quarter, nine in ten consumers thought that jobs were currently in short supply”, representing the longest and bleakest assessment of the current job situation ever recorded.

“When asked about future job prospects, consumers were a bit more optimistic than last quarter, with one in four who expected jobs to be more plentiful in 2010,” added the report.

The favourable level of economic expectations held by businesses “were primarily due to a much improved outlook for the Jamaican economy as well as what firms judged to be a favourable climate to profit from investment due to improving overall economic conditions”.

According to the survey, the proportion of firms expecting improving economic circumstances were at the highest level in a decade, although the positive view, in part, reflected the severity of the recession.

At the same time, investment plans neared peak levels as 48 per cent of all firms cited positive investment plans — the highest proportion ever recorded — while six in 10 firms reported that their financial balance sheets have improved — the highest in three years.

As a result, higher profit margins were expected by 53 per cent of businesses surveyed.

On the other hand, 47 per cent of all firms reported disappointing profits, which as a proportion of firms to hold a dismal view of current profits was the third highest on record.

“Firms underestimated not only the length and extent of the downturn in domestic demand, but also failed to anticipate the indirect and direct costs of the new fiscal and monetary policies that would be implemented,” added the report.