Jamaica’s Index of Business Confidence declined by 7.6% in the 2nd Quarter of 2022, recording a level of 121.1 points compared to 131.8 points in the previous quarter. Over the same period, the Consumer Confidence index remained stable at 156 points compared to 157 points at the end of the first quarter.

The performance of the two benchmark indices was disclosed this morning by Don Anderson of Market Research Services Limited at the Jamaica Chamber of Commerce’s (JCC) virtual event staged in partnership with the NCB Financial Group. The Indices have been produced since 2001.

Among the key points contributing to the performance of the Business Confidence Index:

• Optimism about current business conditions is down. Firms are less optimistic. Firms are less optimistic about the current business conditions resulting in a change in the index from 139.7 points in the first quarter of 2022 to 131.5 points in the second quarter.

• Expectations about future business conditions continues its downward trend. Fewer firms than in Q1 expect the economy, their financial standing and their profits to be better over the next 12 months, it is worth noting that they typically don’t expect these to get worse but instead to remain the same.

• Return on Capital Invested has been as expected. More than half of the firms surveyed (56%) reported that their profits were as expected. There has been a small (-5%) shift from firms that reported profits being better than expected to firms reporting they were worse than expected.

• Firms believe it’s a good time to investment. Just over half of the firms surveyed (53%) agreed that it is a good time to make capital investment. Over one third (35%) however, believe that it is a bad time for capital investment. The remaining 12% remained uncertain.

• Expectations for Economy continues downward trend. The downward turn recorded in Q3 of 2021 has continued into Q2 of 2022. The proportion of firms that expect the economy to improve has declined by 10% points over the period – from 56% in Q1 to 46% in Q2.

• Getting the economy back on track, continues to be the most important to firms: Firms continue to highlight a focus on the economy – specifically getting it back on track -, as the number one area of focus for the government. Asked to indicate the number one priority area on which they believe the government should focus attention, 26% cited the economy. Controlling the spread of COVID-19 (18%) and inflation (11%) completed the top three.

•Crime and violence continue to be the most critical issue that the country faces: Crime and violence continues to be the most important problem that the country faces at this point. The majority of firms (53%) cited this as the most critical problem the country faces at this time. The exchange rate and unemployment complete the top three.

• Confidence of survival continues to increase: Approximately 79% up from 71% in Q1 are very optimistic that their business will survive the effects of COVID-19. Sixteen percent (16%) remain cautious in their expectations of survival but believe that they are probably likely to survive after the pandemic.

• Recovery within the short term is still anticipated: A majority of firms (75%) anticipate recovery within the short term, that is, within 1-3 years.  The other 25% believes that recovery will take longer.

With respect to the Consumer Confidence Index, the survey indicated that:

• Current Economic Conditions climbs: The Index of Current economic conditions is up by 15.5% from 168.8 in Q1 to 195 points in Q2. Consumers’ perceptions of current job conditions is the main driver of this change. The proportion of consumers who believe that jobs are plentiful has moved from approximately 5% to 12%.

• Expected Economic Conditions is down: The Index of Expected Economic Conditions is down by approximately 6.6% from 153.1 points in Q1 to 143.0 points in Q2.

• Downward movement in business and job expectations: Consumers’ assessment of the future business conditions is down by 11.9% from 113 points in Q1 to 100 points in 2022. Their assessment of future jobs is also down but by 7.9% from 113 points in Q1 to 104 points in Q2 2022.

• Expectations for Income Gains dips. Expectations for income gains reported a dip for the first time in over six (6) quarters from 135 points in Q1 2022 to 133 points in Q2.

Both businesses and consumers were agreed (albeit with differing orders of ranking) that the government’s top 5 priorities should include controlling the spread of COVID, Getting the Economy Back on Track, & Creating More Jobs & Opportunities. Businesses believed that Managing Inflation and the Continuation of Public Education were also paramount, while Consumers listed Improving Education and the School System and Focussing on the Country’s Health & Wellbeing in their priority ranking.

The release event also included presentations by Ms. Annya Walker, Vice President, Strategy Research Innovation & Projects at NCB Capital Markets and Mr. Dane Nicholson, Manager of Special Investigation, NCB Fraud Protection Unit. A business panel comprising Mrs. Thalia Lyn (Island Grill) and Phillip Ramson (Chas E Ramson) also provided comments to participants based on their experiences doing business at this time.