Ashford W. Meikle, Business Reporter

Professor Richard Curtin, head of the Survey ResearchCentre, University of Michigan. - Ricardo Makyn/Staff Photographer

Business and consumer confidence slipped in the second quarter of the year but both remained at near record levels.

Consumers remained buoyant about their job prospects, while the business community continues to have a favourable view of the economy, the latest confidence surveys show.

"Consumers expected the current economic expansion to remain strong in the year and, as a result, produce more new jobs and income gains," said Professor Richard Curtin of the University of Michigan who analyses the quarterly surveys. "The Jamaican business sector remained very optimistic about their financial prospects during the year ahead."

Companies, the professor said, were expecting a boost in economic activity, post-election, based on expectations of potential policy shifts.

"They expect the environment to be very supportive of economic growth," the professor said.

At 135.6 points, the Index of Consumer Confidence was below the record high of 139.9 recorded in this year's first quarter but above the 130.4 recorded in the same period last year, and remains the second-highest level recorded in the six-year history of the surveys.

The results were presented Tuesday at a media briefing at the Terra Nova hotel in St. Andrew.

Judging the prospects

The survey indicated that two thirds of all consumers judged the economy as good or average in the second quarter of 2007, a percentage that has remained constant in the past year.

"When asked about economic prospects for the year ahead, consumers were as optimistic in the second quarter of 2007 as a year ago, with just 30 per cent that expected any worsening in the overall economy," said Curtin.

"Government economic policies were as frequently credited for the gains as blamed for the losses, each mentioned by one in four consumers."

The survey revealed that, overall, 25 per cent of Jamaicans remained positive about future job prospects, the second-best reading for job growth in the past six years.

In the tourist areas, this figure stood as high as 45 per cent.

There was, however, a slight decline in the percentage of households who expected their incomes to increase - 56 per cent compared to the 59 per cent in the first quarter of this year.

Notwithstanding, there has been a rebound in spending plans. For example, there has been a rise in home-buying plans to 12 per cent, up from the 10 per cent in the first quarter.

Similarly, vehicle-buying plans rose to 17 per cent, up from 14 per cent, but below the 21 per cent recorded last year, while vacation plans rose to 32 per cent, just ahead of the 29 per cent in the prior quarter and just slightly below the peaks of 33 per cent in 2006 and 35 per cent in 2001.

Turning to the business sector, Curtin commented that the index had "backed off a bit", but not significantly, and that companies "expect the economy to continue to expand." During the quarter, there was a jump in the profits of companies, with companies reporting the most overall assessments of their profits in six years.

But businesses expect a slowdown in profit growth and larger increases in costs, the survey revealed, notwithstanding the 56 per cent who expected their balance sheets to improve, which is actually down from 68 per cent in the first quarter.

Curtin said 42 per cent of firms thought it was a good time to make new investments so they could "more fully participate and profit from the ongoing expansion."

ashford.meikle@gleanerjm.com