Susan Gordon, Business Reporter

Professor Richard Curtin, head, Survey Research Centre, University of Michigan, said for the first time since 2001, more consumers were hopeful about job creation. - Ian Allen/Staff Photographer

Business confidence fell in the fourth quarter of 2007, dragged down by expectations of slower economic growth, and weaker financial and investments conditions, according to Professor Richard Curtin, as he announced the latest survey results Tuesday.

Curtin, the head of the Survey Research Centre of the University of Michigan and a consultant to the Jamaica Chamber of Commerce, said firms were more concerned with their financial situation in anticipation of how the new government would handle its budget deficit as well as the materialisation of policies in 2008 and 2009.

Consumer confidence also reflected a modest pull-back in the fourth quarter following the national election even as most remained optimistic about future economic conditions. Curtin said this was the most positive Jamaican consumers - 47 per cent of whom expected improved job creation in the year ahead - had been about employment in seven years.

Profit performance

For firms, the lowered expectations for profit performance seemed to have been one of the more telling indicators, with only 45 per cent of survey respondents anticipating improved profits, down from 64 per cent.

"You can see the drop in business confidence," said Curtin, speaking at the NCB Capital Markets-sponsored event.

He said the pull-back following the national election erased all the gains made in 2007.

"They were less positive this year [2007] because they expected these policies to materialise by 2008 to 2009," he said, adding that companies were waiting for more policy details.

"Firms are more concerned with their financial situation because they want to see how Government will handle its budget deficit," said Curtin.

Half of the firms surveyed were concerned about fiscal and monetary policy while 90 per cent continued to site crime and violence as a hindrance to improving business conditions.

Interest rates

High prices took third place in the list of concerns even as firms continued to frown at high interest rates and cautiously observed the fiscal policies of the new govern-ment, particularly its spending priorities and and taxes.

Some 66 per cent of businesses in the fourth quarter of 2007 said the current returns on profit met expectations, while only 10 per cent believed their profit would exceed their expectations - a drop from the 28 per cent in the third quarter.

Just about 28 per cent of all firms surveyed anticipated improvement in the pace of economic growth down from the 45 per cent in the previous quarter of that year and three per cent higher than the corresponding quarter a year ago.

susan.gordon@gleanerjm.com