Business confidence increases

Business confidence increases

While consumer optimism remains stable in fourth quarter

Wednesday, January 20, 2021

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BUSINESS confidence increased in the fourth quarter of 2020 to 128.3 points up from the 109.2 points recorded in the previous quarter, according to the latest findings of the Jamaica Chamber of Commerce (JCC) business and consumer confidence indices.

The survey, presented yesterday by pollster Don Anderson, indicated that while the downward trend in business optimism commenced in the second quarter of 2019, the latest performance takes the index close to where it was in quarter one of 2020 (129.2 points) before the novel coronavirus pandemic.

Firms were buoyant about current business conditions in the quarter under review as this index increased to 132.3 points, up from the 109.4 index points recorded in the previous quarter.

The survey further revealed that while businesses consider the time ripe for investment, the fact that they are still wading through the effects of the pandemic is preventing them from doing so.

Businesses appeared uncertain about expectations about the future business conditions as this index fluctuated during the year 2020. Having dropped in the third quarter from 121 points to 109 points, the index increased to 126.8 points in the fourth quarter of 2020, the highest in the year.

However, approximately 58 per cent of firms are very optimistic that their business will survive the effects of COVID-19, up from the 46 per cent recorded in the third quarter. Approximately 2 per cent are not convinced their business will survive compared, while 8 per cent are uncertain.

While issues related to COVID-19 are considered major, firms (33 per cent) highlight crime and violence as the number one problem that the country faces at this time. This represents no change over last quarter. Unemployment (15 per cent) is second, while controlling the spread of COVID-19 was ranked third (13 per cent).

On the other hand, optimism among consumers remains stable at 131.8 for the quarter under review, a slight change from the 130.3 points recorded in the previous quarter.

This is driven by their perception of current business conditions, the availability of jobs, as well as their expectations for income.

According to the survey, consumers are generally of the view that business and job conditions will remain the same due to the impact of COVID-19.

The survey indicated that 36 per cent of consumers are of the belief that “no jobs are available and no one is employing”. Further, 35 per cent believe that the job situation will get worse for two main reasons: no jobs are available (40per cent), and people are losing jobs or being made redundant (28 per cent).

Concurrently, expectations for economic conditions increased marginally by four index points from 128 to 132 in the quarter under review. The highest-ever recorded was in the second quarter of 2020, with 175 points but this declined dramatically in the third quarter to 128, reflecting consumers' doubts as the effects of the lockdown due to the pandemic were realised.

Over one third are however convinced that business conditions will get better, primarily because in a year they anticipate that people will learn how to live with COVID-19 and move on with life. Many also cited that there is evidence of new businesses opening up and investors coming into the island.

Conducted by Market Research Services, the index is derived from quarterly surveys of the chief executive officers and senior officers in approximately 100 Jamaican firms and 600 consumers islandwide on business and consumer opinions related to current conditions and future expectations of the economy.

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