Confidence flat amid pessimistic expectations of hard times for business and consumers
Confidence remains flat in the second quarter of 2022, with consumers and businesses expecting harder times to come.
Jamaica along with other major metropoles are experiencing declines in confidence, said Don Anderson, pollster and CEO of Market Research Services Limited, as he presented the findings of the quarterly Jamaica Conference Board Survey of Business and Consumer Confidence, on behalf of the Jamaica Chamber of Commerce, on Tuesday.
The pollster cited issues related to global inflation and the conflict between Russia and Ukraine as well as commodity prices, as drags on sentiment.
“Consumers are not in an optimistic mood,” said Anderson. “Unless there is a major positive interjection, then consumer confidence is likely to show a decline in the third quarter in 2022.”
The consumer confidence index remained flat at 156 points in the second quarter, compared to 157 points in the first quarter. The index still towers over the 140 points recorded a year earlier, in 2021, which was the lowest confidence level in five years, as the society grappled with lockdowns from the COVID-19 pandemic. But the trend over five years shows that consumer confidence continues to substantially underperform the high of 180.2 points in 2019.
Anderson canvassed 600 individuals across Jamaica and 100 businesses across various industries on behalf of the conference board.
“Consumers are concerned and wary about conditions. They are bracing for more difficult times ahead. The economy, they believe, is going to get tighter and expect more difficult business conditions to prevail,” the pollster said on the conference call that has now become the mode by which the results of the confidence indices are released.
Consumers also expressed great concern about price increases as income remains flat. Also, 98 per cent of respondents expect prices to rise over the next 12 months, but do not see where the jobs market can raise them out of inflation poverty.
“Jobs are never plentiful. Going forward, consumers are less optimistic,” Anderson said.
As for businesses, Anderson noted that confidence dipped somewhat to score 121 points in the second quarter, down from 131 points in the previous quarter. The second quarter also trails the average of 124.9 points a year ago. And over five years, the index trails the high of 141.2 points in 2018, but just about matches the low of 120.5 points in 2020.
“Businesses are not particularly optimistic about moving forward, but are confident about staying in the race,” he said.
Nearly one-quarter of businesses say they expect things to get worse, rising from 15 per cent in the first quarter. They cited high prices, the war in Ukraine, the disruption in supply chains, foreign exchange instability, and a stagnant economy as reasons for their pessimism.
In the quarter under review, businesses operating in the sector categorised as ‘finance, insurance, real estate and business services’ expected to make investments going forward, as did those in the retail and distribution trade. Those reporting a likely reduction of their investment plans were mainly operators in the tourism and hospitality industry.
Overall, businesses were mostly concerned about getting the economy back on track, followed by crime. Price increases, however, also continue to plague the prospect for profit.
“The majority of businesses are spending more to function this year than last year, and expect further price increases going forward,” Anderson said.
The business operators who remain optimistic cited their own personal belief, government policies, economic recovery, tourism rebounding, and the Jamaican government putting an end to lockdowns.
Among households, those reporting that they received remittances dipped to 24 per cent from 29 per cent in 2021, and 35 per cent in 2020. In 2016, 38 per cent of households stated that they received remittances.
Anderson previously indicated that he would do additional research into the reasons for the decline. The additional data showed that among remittance recipients, 47 per cent of respondents stated they received more funds, 23 per cent received less, and 30 per cent received the same as before.
“The overall situation is that people are receiving more remittances” in dollar terms, “but fewer people are (recipients), and I think it is an important point to make,” the pollster said.
The Bank of Jamaica, BOJ, which regulates but also tracks economic performance, noted that for the period January to May, remittances dipped to US$1.36 billion, compared to US$1.4 billion a year earlier. In 2021, Jamaica reported remittance inflows of US$3.5 billion for the year.
Remittances are sums of money sent from relatives or acquaintances as gifts rather than as payment for the provision of goods or services.
The BOJ indicated in its latest remittance bulletin that the fall in remittance inflows was possibly due to persons resuming the practice of personally delivering cash to relatives on travel trips to Jamaica, whereas during the pandemic they had resorted to official remittance channels due to travel restrictions.