Professor Richard Curtin (right) explains the most recent survey results for business and consumer confidence on Tuesday, during the release of the first quarter 2007 results. Seated (from left) are Jacqueline Brice, data processing manager, Market Research Services Limited, and Desmond Blades, chairman of the Jamaica Conference Board, the research unit of the Jamaica Chamber of Commerce. - Contributed

Ashford W Meikle, Business Reporter

Consumer confidence is at record levels, the latest surveys have found, but while Jamaicans are upbeat about future prospects, they remain cautious in their spending and the business community is split on the country's economic policy.

"There is an unbridled optimism in the Jamaica economy between consumers and businesses," noted Professor Richard Curtin of the University of Michigan, who analyses the survey results on behalf of the Jamaica Conference Board. The surveys are done by Market Research Services.

"Consumers were more optimistic about their future economic prospects at the start of 2007 than at any time during the past six years; the Jamaican business sector has become as optimistic about their financial prospects as at any time during the past six years," noted Curtin in his presentation yesterday at the Terra Nova hotel.

Conducted between January 11 and March 11, the Consumer Confidence Index rose to 138.1 in the first quarter of the year, up from 128.0 in the last quarter and above the prior record of 137.2 in the second quarter of 2006.

Two-thirds of Jamaicans expect their standard of living to improve in the next 12 months compared to the nine per cent who believe their station will worsen.

Professor Curtin argued that the surge in consumer confidence was driven primarily by single digit inflation ?— which, at 5.8 per cent for the 2006 calendar year, is the lowest since 1980 ?— as well as optimism about job growth.

"Recent progress in the Jamaican economy was judged more favourably than at any other time during the past six years. In the first quarter 2007 survey, 35 per cent of all consumers expected the pace of economic growth to be even faster."

But optimism about employment growth differs across the regions because of the stronger job prospects outside of Kingston, and slightly less positive outlook for the economy among Kingstonians.

"An adequate supply of jobs was reported by 30 per cent of residents of the tourist areas, by 20 per cent of Kingston residents and by 25 per cent of residents of other areas," said Curtin.

Notwithstanding the new peak in consumer confidence, some 79 per cent of the respondents feel that jobs are in short supply compared to the 17 per cent who believe that the job pool is adequate or the four per cent who say jobs are abundant.

"Jamaican consumers remained very cautious cautious in their spending plans," said Curtin. "Overall, the data indicated very good but somewhat slower overall pace of growth in consumer spending during the year ahead," said Curtin.

For example, home buying plans fell 10 per cent in the survey from 18 per cent a year ago, vehicle buying plans fell to 15 per cent from 27 per cent a year ago and vacation plans fell to 20 per cent from 34 per cent a year ago.

Examining the data for the business sector, Curtin noted that there has been a surge in business optimism, with the index increasing to 126.7, bettering the 110.5 in the last quarter of 2006, but falling just six-tenths of a point short the 127.3 all-time peak recorded in the first quarter of 2005.

Looking at the surge in business confidence, he said, "The largest gains were in how firms judged their future profits and balance sheets as well as the expected future strength of in the economy and their investment opportunities. The only concern voiced by firms were there lacklustre returns o their investments during the past year."

There was a slight increase over the last quarter of 2006 in how the private sector viewed current business conditions, according to the survey, with some 68 per cent expressing the view that it was either good or average compared to the 66 percent in the fourth quarter of last year.

With negative expectations cut in half since late 2006, 21 per cent of all firms expected the economy to worsen, compared to the 45 per cent in the fourth quarter of 2006. But Curtin argued that it was hard to explain why negative views of the economy have retreated.

"It may be because they are satisfied with the current administration or it could be with a coming election there could be a regime change," he said.

With profits during the year in line with what businesses expected, two thirds of the firms expected their profits to improve during the year ahead while only five per cent expected their profits to decline during this period. The survey indicated that the balance sheets of firms improved for the third consecutive quarter, rising to their highest levels in six years.

"Among all the firms, 68 per cent reported that they expected their overall financial situation to improve during the year ahead, the largest proportion recorded since the survey began in early 2001."

Crime and violence continue to be a major concern, the survey revealed but, according to Curtin, the data indicate that the overall pace of economic growth will be slightly higher than the positive levels recorded in the past year.

ashford.meikle@gleanerjm.com