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Financial News

Nov 2012 Financial News

Confidence picks up — slightly

Nov 14, 2012

CONFIDENCE among Jamaican firms has begun to stage a revival, said the surveys of consumer and business Confidence.
Economic optimism among business firms posted a significant gain in the third-quarter 2012 survey.

But, the improved optimism was recorded despite the substantial problems still facing the US and European economies, the country's most important trading partners.

"Headwinds from trading partners will challenge domestic economy, as slow economic growth will persist in US and Europe," revealed the 2012 Survey of Consumer Confidence — Third Quarter Summary Report.

Developed in cooperation with the surveys of consumer department at the Survey Research Centre at the University of Michigan, the Index of Business Confidence was 106.3 in the third quarter 2012 survey. This was up from 91.8 in the second quarter and the year earlier figure of 95.8.

The proportion of firms that expected conditions in the national economy to worsen fell modestly to 46 per cent in the third quarter from 52 per cent in the prior quarter.

Although improvement expected in the economy was rather modest, it nonetheless represented a welcome shift in direction of the outlook from last quarter, the survey authors said.

When asked to identify the top problem facing the country, the main issues were crime and unemployment.

"Largest disappointment from new government economic policies is continued scarcity of jobs," the survey said.

Factors that reduce the potential for economic growth were, the need for a better-educated workforce, and a reduction in government regulations and favouritism.

Amid the news that confidence among the Jamaican firms has been revitalised. Firms continue to hold dismal views about the financial returns on their investments during the past year.

Rising profits were expected by more than half of the firms in the third quarter, up from 39 per cent last quarter.

"The rebound in firms' financial situation and their profit outlook is a positive sign for future investments and economic growth," the survey said.

Consumer confidence too, has been renewed.

"The latest survey indicates that consumers anticipate a slowly improving economy, resuming the trend recorded during the past few years," the third-quarter consumer confidence summary report said.

But, spenders have discarded unrealistic hopes of a quick economic fix that they harboured at the start of 2012.

One-in-four consumers expected gains in the overall economy in the third quarter 2012 survey, half the level recorded at the peaks in optimism and twice the level recorded at the all-time lows.

The current jobs situation remained dismal, with nearly nine-in-10 Jamaicans reporting that jobs were scarce and hard to get.

More Jamaicans anticipated income gains in the third quarter survey than any time since 2008, with the sole exception of the unrealistic surge at the start of 2012.

Although the third quarter 2012 survey recorded small increases from the second quarter, overall purchase plans remained at subdued levels when compared with prior years.

Plans for vacations and home purchases increased, but vehicle buying plans were held by 15 per cent, the same as last quarter, and just below last year's 16 per cent.

BY SHAMILLE SCOTT Business reporter
Jamaica Observer
Wednesday November 14, 2012