Confidence up for the first time in four quarters
Consumer and business confidence inched up for the first time in four quarters, driven by expectations for jobs and future profits, the survey for the December quarter has found.
Optimism broke through even though large numbers of Jamaicans are hustling to survive and businesses are increasingly concerned about the impact of crime and violence on the society.
The economy entered serious turbulence but now “we can see blue skies,” said pollster Don Anderson at the release of the fourth-quarter surveys done by his firm on behalf of the Jamaica Chamber of Commerce. The recovery remains below 2019 levels, however, he cautioned.
Consumer confidence grew to 131.7 points in the December quarter from 127.8 points in the third-quarter, said Anderson; while business confidence grew to 128.3 points from 109.2 points in the same period.
“It was driven by positive expectations in changes in income and job expectations,” Anderson said, adding that despite the rise, the index still trails the apex of 183.4 points in the second quarter of 2019.
The slight improvement tracks with the improvement in economic outlook. The Government, through the Statistical Institute of Jamaica, confirmed that the economy grew at a near-historic pace in the September quarter at 8.3 per cent. This forms part of the recovery and follows on the negative 15.7 per cent slide in the June quarter.
“These results correlate with another view of the economy that things are getting better,” said Robert Stennett, deputy governor of the Bank of Jamaica, BOJ, during the release of the confidence surveys, hosted online by the Jamaica Chamber on Tuesday.
“The BOJ is of the view that the worst is behind us, but the outlook remains highly uncertain and there’s a lot of risk,” he said.
The BOJ’s projections for December and March 2021 is that the economic growth will continue, but not at the level in September, said Stennett.
“We won’t see another 8.3 per cent growth, but what this translates to is still a V-shaped recovery, or one that sort of looks like a Nike swoosh,” he said, referring to the curve of the popular sneaker company’s logo.
The central bank projects that for the fiscal year ending March 2021, the Jamaican economy will record a decline within a range of eight to 10 per cent, but will partially recover to record growth of 3.0 per cent at the end of fiscal 2021-22, and return to pre-COVID levels the following year.
The BOJ, in its quest to maintain stability in the Jamaica dollar money market, provided liquidity equivalent to 4.0 per cent of GDP in JMD terms and up to 7.0 per cent of GDP in USD terms, or well in excess of US$1 billion in gross amounts, said Stennett.
The onset of the COVID-19 pandemic led to the largest fall of the consumer confidence index in years, dipping to 130.3 points in the third quarter of 2020. That fall, however, pales in comparison to the CPI’s record lows, its two lowest readings being 80 points in 2003 and just under 90 points in 2013.
The December 2020 consumer confidence data showed that current job prospects are very low for consumers, at 24 points, down from 28 points in the third quarter. But future job prospects scored 96 points in December, up from a low of 93 points in September 2020.
Overall, the expectations for job prospects are lower than in previous years, which matches the overall downturn in employment. The labour market has suffered a blow with unemployment at 12.6 per cent based on the July 2020 survey, a marked rise from 7.3 per cent in January 2020.
The construction sector, however, has proved resilient.
“Even though it may be temporary jobs, we are seeing uncles, fathers, wives getting jobs in the construction sector, which is pretty much buoyant. And it is contributing to the arresting of the decline in consumer confidence,” said Anderson.
National Commercial Bank’s Tanya Allgrove said construction initially took a dip, but quickly rebounded.
“Construction that was temporarily shut down has restarted. We have had a short lull in the construction industry, but now it has been robust throughout,” said Allgrove, assistant general manager for the small and micro enterprise division at NCB.
Overall, however, consumers are still mainly concerned with “controlling the spread of the virus,” said Anderson.
Jamaica has recorded more than 14,000 cases and around 326 deaths at last report. The Government continues to implement controls on people movement, through curfews and other mitigation measures. Businesses have complained that these measures affect consumer spending and also impacts jobs.
“Controlling the spread of the virus remains the top priority for firms, but to a lesser extent,” said Anderson. “Higher on the list of priorities this quarter is efforts to curb the unemployment ... and efforts to get the economy back on track.”
In previous quarters, businesses prioritised the health of employees and the public, but with murders spiking, they are back to viewing crime and violence as the most critical issue facing the country.
“While issues related to COVID-19 are considered major, firms highlight crime and violence as the number one problem that the country faces at this time, at 33 per cent of respondents,” Anderson said.