Consumers are more confident, but businesses are more cautious, new data released on Tuesday shows.
Consumer confidence grew to 174.7 points in the fourth quarter of 2023, which was 8.5 per cent higher than in the third quarter, and also an improvement on the fourth quarter in 2022.
Concurrently, business confidence dipped 4.0 per cent to 139.1 points relative to the third quarter, and was also lower than a year earlier
“It suggests that consumers are beginning to feel that we are moving out of the crisis of COVID-19,” said Don Anderson, Chairman and CEO of Market Research Services Limited, the firm that conducts the confidence surveys on behalf of the Jamaica Chamber of Commerce.
The chamber has released 80 quarters of surveys since they began 22 years ago.
The highest confidence levels were recorded in 2019.
In the current survey, 30 per cent of consumers said they expect job prospects to improve, up from about 25 per cent in the previous year. Also, more consumers plan to purchase homes, buy cars, and travel than in the previous quarters.
“The intention to purchase is up substantially,” said Anderson. For instance, persons expecting to take vacations climbed from 28 per cent in 2022 to 44 per cent in 2023.
Still, while consumers intend to spend more, they don’t expect their household income to rise. Anderson said that consumers are already reeling from higher inflation which has reduced their spending power. Three-quarters of respondents noted that prices of the consumer items have “increased significantly” over the past year. Another 17 per cent said prices have risen “moderately”.
Anderson, in tallying the figures, said that nine out of 10 persons have cited higher costs that they are “bearing in mind constantly” when making purchasing decisions. Additionally, 27 per cent of the respondents said they rely on the remittance of funds from broad to augment their income. That’s up from 26 per cent in 2022 but below the pre-pandemic level of 35 per cent.
Still, notwithstanding the pessimism on income, consumers are generally optimistic that good things are going to happen, the pollster said. Fewer respondents felt the economy would worsen over the next 12 months. Those with that view fell from 40 per cent to one-third of respondents.
The more pessimistic consumers cited the high cost of living, lack of employment, crime, government not assisting enough, lack of income, and unstable currency as the causes of their low expectations.
Crime remains a priority concern for most consumers.
Overall, when asked the most critical issue facing in the country more than 70 per cent of consumers cited crime.
“Not surprising, but note this was 12 percentage points higher than in the third-quarter 2023,” said Anderson. “So there is a greater appreciation of the problems that crime generates.”
When businesses were asked, 55 per cent of respondents cited crime as the top concern, up 12 per cent over the review period. Businesses were also concerned about fluctuating trade, foreign exchange, a slow-growth economy, inflation and high joblessness.
Anderson said fewer business leaders expect to invest in or expand their businesses. That’s because they “expect their finances to drop and they expect their profit to drop”, he said. Just over half of the over 100 businesses interviewed felt their firm’s finances would improve over the next 12 months, down from 83 per cent in the third quarter of 2023, and 80 per cent in the fourth quarter of 2022.
“Something drove that down. It is significant to note,” he said, without extrapolating on the potential causes.
Less than half of businesses feel the economy will improve over 12 months, down from half a year ago. The sectors with the largest plans to invest include wholesale and retail, tourism and hospitality, transport, storage and communication, farming, and construction.