Consumer and business confidence indices inched up marginally in the second quarter of 2023 when compared to a year ago but mixed when matched against the results generated in the previous quarter.
Consumer and business confidence hit 157.7 points and 138.2 points, respectively. Both indices started at 100 points in 2001 when the survey began.
“Consumers’ view of current business conditions quarter to quarter has not really changed for 2023 but is marginally better than same period last year,” said pollster Don Anderson during the release of the JCC Business & Consumer Indices by the Jamaica Chamber of Commerce.
Anderson explained that there was a wave of optimism that peaked in the third and fourth quarters of 2022 which is now waning in the review period.
“Consumers’ mindsets” are slightly more positive now than a year earlier but nowhere near what it was prior to COVID-19 in 2019, added Anderson, executive chairman of Market Research Services Limited, which conducts research on behalf of the Jamaica Chamber since the inception of the indices in 2001.
“We are beginning to see a gradual improvement in consumer confidence and we see it in the macroeconomic numbers reported on a regular basis. There is a definite connection between growth in the economy even if it is marginally so,” he said.
Consumer confidence fell by two percentage points to 157.7 points compared to first quarter 2023. But when compared with the second quarter 2022 there was a slight improvement. However, the current consumer confidence levels are still well off the peak of 183.4 points in 2019.
Consumers who believe conditions will improve in 12 months cite the reopening of the economy, economic growth, the reduced threat of COVID-19, and general optimism. On the flip side, the reasons cited for worsening conditions include the high cost of living and inflation, ineffective governance, and crime.
Anderson said that more consumers are planning to spend on vacations up 60 per cent year on year, vehicles 30 per cent, and homes up 20 per cent.
“Persons are more willing to travel,” said Anderson. “The minds of consumers are becoming significantly more positive about taking vacations and the lockdown for the last two or three years would have conditioned this kind of response.”
Business confidence “flatlined” to 138.2 points up 0.9 per cent above the first quarter 2023. But less than the 151.3 points in 2019.
Businesses say that their current profit levels are better than expected at 23 per cent compared to 14 per cent a year earlier.
The trend in business confidence over five years shows that while the second quarter results are above the average 137 points in 2022, its still lower than the average 143.6 points in 2019.
The top reasons for believing that conditions will improve in 12 months include overall economic improvement, optimism, government policies, and sectoral improvements. On the other hand, the reasons behind the expectations that conditions will worsen were cited as increased crime, lacklustre economic growth, high prices for goods and services, job losses, and exchange rate instability.
The firms with planning to increase capital investment were mostly within the transport, storage and communication sector, followed by tourism and hospitality, then farming. A year ago, it was led by personal care, followed by construction and installation.
“There’s a certain degree of conservatism compared to the pre-COVID period in terms of how people see their investment plans,” said Anderson.
The confidence reports are generated from surveys of 600 persons and 100 businesses. The current survey period ran from April to June 2023.
The pollster said three-quarters of respondents noted plans to invest in technology, with electronic payment solutions topping the list, followed by customised software for businesses, social media marketing, and new hardware.
The sectors mostly likely to invest in technology were personal care, such as hairdressers, barbers and nail technicians; followed by wholesale and retail establishments; and operators in the tourism industry.
Forum participants in the technology arena affirmed the uptick in interest.
“For us in 2023 we are seeing more customers investing in technology in particular security-based products. It is a very good indication of where things are going,” said Norman Chen, acting CEO of tTech Limited, a technology service provider.
“Businesses are looking to expand and grow from where I sit and are more confident in making investments,” added Lauren Peart, CEO of Blue Dot, a data company.
Yoni Epstein, CEO of Outsourcing Management Limited, which trades as itel, said investments will flow with reductions in interest rates.
“As inflation starts to drop, both locally and overseas, the hope is that at the back end of the year then we will see interest rates start to drop, which will naturally drive business confidence in investing more because capital will become cheaper to be able to receive a return on capital,” said Epstein.
Epstein was also of the view that artificial intelligence will lead to a significant rise in productivity but not necessarily result in heavy job losses in outsourcing. That’s in part due to some US-based outsourcing clients being unwilling to allow AI to solve certain problems in fear that their proprietary data will be scrapable or become accessible online.
“Many of our clients have written to us say, ‘do not use open AI products to build a tool to present to us for sale – to create efficiencies or save costs’, because they have a threat or fear of data exploitation,” he said.
