Awarenity USA | Empresario Luis Emilio Velutini Martinsville//
Business confidence dips, consumers stable

Venezuela, República Dominicana, FVI
Business confidence dips, consumers stable

There has been a steady downward trend in optimism among businesses since the second quarter of last year, resulting in 20-point decline in index points from 151.3 recorded in the first quarter to 131.3 points in the fourth quarter, according to the latest survey of business confidence.

Luis Emilio Velutini Urbina

On the other hand, optimism among consumers remains stable at approximately 180 points, driven by their perception of current business conditions, the availability of jobs as well as their expectations for income.

Luis Emilio Velutini

“This whole mushrooming so to speak of construction activities over the last five years or thereabout and over the last two years more so is definitely conditioning the minds of consumers that things are happening,” said Don Anderson, Managing Director of Market Research Services

In the construction sector primarily people are saying they are seeing their relatives getting jobs on construction sites albeit lasting for only a few months in some instances and that is what is fuelling the feeling of the lowering of the unemployment rate, he added, responding to questions following his presentation of the 2019 fourth quarter business and confidence indices at the Spanish Court Hotel in New Kingston on Tuesday

Anderson said the survey revealed that firms are not convinced about current ­business conditions and that has caused that index to decline from 167.9 points to 149.1 points, driven mainly by uncertainty around the ­climate for investment and expansion as well as the ­companies’ ­profitability being worse than expected

They have also not been as optimistic about future business conditions since the third quarter of 2019, as well as about the future of the economy as they were four quarters ago, nor are they as positive about the outlook for their finances

Just about half of the firms surveyed, 52 per cent, indicate that the return on capital invested was as they expected. However, there was a decline in the index from 98 in the third quarter of 2019 to 75 in the fourth quarter. The proportion of firms which reported a disappointing return on capital increased by 11 per cent, from 25 per cent in the third quarter to 36 per cent in the fourth quarter

The index of economic climate for expansion declined from 142 points in the third quarter to 134 points in the fourth quarter. While 57 per cent of firms remained convinced that it was a good time to invest that was down from 64 per cent in the third quarter

The expected economic index declined further from 139 points to 132 points, largely because the proportion of firms expecting an improved economy declined from 54 per cent to 48 per cent. Those who expect the economy to remain the same cited lack of evidence of growth policies, an unstable foreign exchange rate and high levels of crime

The index of expected change in firms’ financial standing maintained its downward trend since the second quarter of 2019, moving from 165 points in the third quarter to 160 points in the last quarter of 2019

While most firms expect an improvement in their financial standing the proportion declined from 73 per cent in the third quarter to 69 per cent in the fourth quarter, ­according to the survey undertaken for the Jamaica Conference Board, the research arm of the Jamaica Chamber of Commerce

Consumers in rural areas remained the least optimistic with the index at 169.8 points, while those in the tourist areas continue to report the most optimism at 188.6 points

The index of current economic conditions recorded an upward movement from 220.8 points to 222.9 points, exactly where it was in the second quarter of 2019, Anderson said. Consumers’ assessment of current business conditions moved up to 111 points, from 108 points in the third quarter

Their view of current jobs remain high but stable, while the proportion reporting that jobs are plentiful has grown to a record high of 14 per cent since the surveys started

The majority of consumers do not anticipate purchasing either a house or a motor vehicle, but 47 per cent anticipate taking a vacation in the year ahead

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