Business & Consumer Optimism Decline!

Kingston Jamaica: The Jamaica Chamber of Commerce (JCC) released the 3rd quarter of 2019 Business and Consumer Confidence Indices, Tuesday 15 October 2019 at the Courtyard Marriott's Hotel before 32 representatives from the Private and Public business sectors. For the first time in seven years, Consumer optimism recorded a slight decline of 3.5 points, with an index of 179.9 points for the third quarter. The dip is associated with Consumer's current realistic perception of business conditions and their expectations for jobs in the future. The JCC Business & Consumer Confidence report over the last two years, have shown that both business and consumer confidence has improved steadily over the period. Business Optimism also recorded a significant decline of 9.5 points recording an index of 141.2 points from the second quarter's index of 150.7, mirroring the third quarter's index of 2018. Despite this decline, businesses remain positive that their financial position will change. According to JCC Past President, Mr. Larry Watson, “The trajectory for the Business & Consumer Confidence is on the incline even though we have had a slight dip. The trend analysis will show that it is improvement, it is still at the highest level ever and whereas a slight dip exists this is just a temporary reduction based on the current conditions but I think we will see the trajectory continue into a positive mode”. While profits are better than expected, businesses are still concerned about the future of economic outlook, their financial position and ultimately future profits have led to a decline in optimism about business conditions. 52% of businesses said their capital invested was in line with expectations, 28% reported that returns were better than expected, while the remaining 23% said it was not as good as they envisioned. The expected index of current economic conditions for Consumers recorded a marginal decline of 2 points in quarter 3 (220.8 points) in comparison to last quarter's 222.8-point index. On the business side, quarter after Quarter, we have noticed that the expected change in firms’ financial standings continues to change. Up from 169 points in quarter 1 to 175 points in quarter 2 but for the third quarter the index recorded 165 points. Despite the 10-point decline, 73%, which represents the large majority, expected an improved in their financial standing. Sponsor of the JCC Business & Consumer Indices Release, National Commercial Bank’s Mr. Dave Wilson, said that “based on what the survey has revealed, we would have seen an increase for the first quarter and then a 10% dip for the third quarter as it relates to businesses’ positive perception of their financial standings. Businesses generally, though realist must be optimist because they are in business to make money and find ways to deliver. So irrespective of the external factors, which will Richmond Park Great House ● 58 Half Way Tree Road, Kingston ● Tel: (876) 922-0150~1; 922-4857 Fax: (876) 924-9056 ● Email- info@jamaicachamber.org.jm ● Website: www.jamaicachamber.org.jm Executive Committee: Lloyd Distant Jr., President; Michael McMorris, 1st Vice President; Ian Neita, 2nd Vice President; Keith Collister, 3rd Vice President; MelanieSubratie, 4th Vice President.; Wilbert Spence, Hon. Treasurer; Soan Madden, Asst. Hon. Treasurer; Christopher Jarrett, Hon. Secretary; De-Andra Butler, Hon. Legal Counsel; Roydine Graham, Asst. Hon. Legal Counsel; Trevor Fearon, Chief Executive Officer Executive Committee: Lloyd Distant Jr., President; Michael McMorris, 1st Vice President; Ian Neita, 2nd Vice President; Keith Collister, 3rd Vice President; MelanieSubratie, 4th Vice President.; Wilbert Spence, Hon. Treasurer; Soan Madden, Asst. Hon. Treasurer; Christopher Jarrett, Hon. Secretary; De-Andra Butler, Hon. Legal Counsel; Roydine Graham, Asst. Hon. Legal Counsel; Trevor Fearon, Chief Executive Officer no doubt impact businesses ability to deliver, business leaders have no choice but to be creative and ingenious to find ways to stay on top and drive additional revenues which will result in additional profitability. That’s what they are in business to do. NCB is committed to providing advice and support, whether it’s working capital or assistance with any of our other products, to ensure that our clients achieve their goals”. As it relates to the expected economic index for businesses, there was a declined from 172 points in the second quarter of 2019 to an alarming 139 points in the third quarter, the lowest index recorded over the last four quarters. This representation is a reversal of the trend that has been sustained since the fourth quarters of 2018. The proportion of firms that expect that the economy will improve is 76% from quarter 2, down to 54% in quarter 3. While 15% expect it to worsen, up from 4% in quarter 2. There main reasons businesses give for this view of expected improvement were a reduction in unemployment levels; the economy appears to be progressing on the right path and confidence in government initiatives. Those who expected it to worsen, cited the unstable foreign exchange rates as their main reasons for being doubtful. Sub-Sponsor representative, Mrs. Marlene Street Forrest, Managing Director of Jamaica Stock Exchange (JSE) also shares the view that the confidence results is very significant and relevant should be used more by businesses. She also believes that there will always be glitches along the way, factors that drive the economy may not always be favourable but despite the challenging factors, businesses and consumers must not feel daunted about investment. In fact, the significant fluctuation of the dollar, was seen as a major challenge to more long-term planning, which business thrive on. The survey showed that there was no change in the usual Christmas plans, with firms giving three main plans they had for the season: to host an annual Christmas treat for staff(23%); offer a bonus (20%) and tokens/treats for customers (12%) while 20% had no immediate plans. Consumers on the other hand, 66% indicated having no plans for Christmas. We are of the view that much of the upward movement of both indices over the last four years (since 2015) can be attributed to Jamaica’s macro-economic performance over the period and across successive administrations as well as the proliferation of construction projects (especially roads as well as residential and commercial properties) and the substantial growth in the number of Business Process Outsourcing (BPO) and the associated employment generated through these projects. The results derived from the JCC's quarterly surveys of Businesses and Consumers have become indispensable for many institutions and are now demonstrating their utility as a leading indicator of GDP Outcomes. -