By McPherse Thompson, Staff Reporter
Although they were slightly more optimistic about future economic conditions, consumers did not expect strong enough economic growth to lower the unemployment rate - Survey
BUSINESS CONFIDENCE among Jamaican firms is 14 per cent higher than its level a year ago, primarily because of companies' expectations in terms of their ability to improve profitability and hence their financial position.
However, while consumer confidence remained above the 2001 figure, their assessments of the economy have become more negative, primarily because of the slow growth and fewer jobs.
The results of the third quarter business confidence surveys were presented by Professor Richard Curtin, head of the Department of Consumer Surveys at the University of Michigan. The presentation was made during a function hosted by the Jamaica Conference Board at the Terra Nova Hotel, St. Andrew yesterday.
The surveys were conducted by Don Anderson of Market Research Services and included a sample of 100 firms and 600 individuals across the island. Professor Curtin analysed the survey results.
According to the results, Jamaican businesses expressed more confidence in their economic situation in the third quarter than at any other time during the past year. It said that while the overall level of confidence was only slightly above the second quarter, it was 14 per cent higher than the corresponding period in 2001.
Businesses were more optimistic about prospects for the Jamaican economy, but they were less confident that their own companies would benefit. "Nonetheless, the slight decline in expected profitability still meant the majority of Jamaican firms anticipated higher profits and expected their firm's financial position to improve during the year ahead," the report said.
Businesses also reported their rate of return on investments improving, with 23 per cent reporting that their profits were better than anticipated. It was also the highest level of an expected improvement in profits during the past year.
Companies were much more optimistic about prospects for the Jamaican economy during the year ahead, the survey report said. Those who expected conditions in the economy to worsen fell to 22 per cent in the third quarter, a half of the 44 per cent recorded during the second quarter, and the lowest level in more than a year.
The report said that while most businesses cited economic factors for the expected gains, 20 per cent cited the upcoming general elections as the reason for their favourable outlook.
Despite the improved economic outlook, however, businesses were slightly more cautious about whether it was currently a good time to invest in expansion. Overall, 52 per cent of firms believe it was bad to invest in the current climate, an increase over the 46 per cent who held a similar view during the second quarter.
The majority of firms expect their financial prospects to improve during the year ahead, with just 12 per cent saying they expect it would worsen. Just over a half of the companies anticipated larger profits, with 13 per cent expecting a decline.
Unlike the business sector, consumers viewed conditions in the national economy less favourably than anytime during the past year. Overall, 47 per cent of the respondents thought the economy had worsened, up five per cent over the second quarter. Almost 90 per cent of consumers thought jobs were scarce in the third quarter.
Although they were slightly more optimistic about future economic conditions, consumers did not expect strong enough economic growth to lower the unemployment rate. While 23 per cent of consumers expect the economy to improve - the highest recorded during the past year - the proportion that expect it to worsen also rose. "This inconsistent shift in opinion represents uncertainty due in part to changes in economic factors and to potential changes in government economic policies," the report said.
Overall, 58 per cent of the consumers expected higher living standards, while 19 per cent expected a decline. Consumers' plans to spend on homes, cars and vacations rose to nine per cent, 14 per cent and 29 per cent respectively, all representing about two percentage points higher than the findings during the second quarter.
The surveys were organised by the Jamaica Conference Board, an affiliate organisation of the Jamaica Chamber of Commerce (JCC), and were developed in co-operation with the Surveys of Consumers at the Survey Research Center, University of Michigan.
