Consumer sentiment in Caricom has improved – Survey

Despite an apparent collapse in consumer sentiment in Grenada, consumer sentiment across Caricom improved somewhat during the third quarter of 2011.

In the latest Department of Management Studies, UWI, Cave Hill quarterly survey of consumer sentiment, the Caricom Consumer Sentiment Index (CCSI) rose from 58 to 66.  In terms of our major trading partners, for the third quarter of 2011, the Consumer Sentiment Index fell from 59.4 to 57.4 in the USA, fell from 48 to 45 in the UK and rose from 45.2 to 45.4 in Canada.

The improvement in sentiment in Caricom was driven by a 17% increase in the number of consumers reporting an improvement in their personal financial situation, a 21% increase in the number expecting their personal financial situation to improve in the next twelve months and a 16% increase in the number who expect general economic conditions to improve over the next twelve months.

The CCSI for the third quarter of 2011 ranged from a high of 82 in Guyana to a low of 27 in Grenada.   The most dramatic development for the quarter was an apparent collapse of consumer sentiment in Grenada as the CCSI for that country fell from 60 to 27.

The decline was driven by an 47% increase in the number of consumers reporting that their personal situation had worsened in the quarter, a 49% increase in those who thought business conditions had worsened, a 70% increase in those who expected business conditions to worsen over the next twelve months and an 84% increase in the number reporting that buying conditions had worsened.

The fallout from the LIAT strike action which adversely affected the crucial carnival period, the lack of activity in the construction sector and the loss of financial reserves as a result of the collapse of British American, Capital Bank and the SGL Holdings, were all cited as major factors negatively impacting on consumer sentiment in the Spice Isle.

Consumer sentiment was most robust in the commodity producing nations of Guyana, Suriname and Trinidad and Tobago.  The somewhat stronger sentiment in these countries seems to reflect the fact these economies benefit from the current boom in commodity prices and are less dependent on tourism.  There was a major rebound in consumer sentiment in Guyana as the CCSI increased from 54 to 82.

The improvement in sentiment was driven by a 70% increase in the number of consumers reporting that their personal situation had improved during the quarter, a 66% increase in those who expected their personal situation to improve over the next twelve months, a 76% increase in those who expected business conditions to improve over the next twelve months and a 41% increase in those who thought buying conditions had improved.

There were also significant improvements in sentiment in Trinidad & Tobago where CCSI improved from 54 to 72 and in St. Kitts & Nevis where the CCSI improved from 46 to 60.  In the case of Trinidad and Tobago, the improvement in sentiment was driven by a 33% increase in the number of consumers reporting that their personal situation had improved during the quarter, a 34% increase in those who expected their personal situation to improve over the next twelve months and a 78% increase in those who expected business conditions to improve over the next twelve months.

The reduction in crime as a result of the curfew emerged as a major factor influencing improved sentiment.  In St. Kitts & Nevis the improvement in sentiment was driven by a 47% increase in the number of consumers reporting that their personal situation had improved during the quarter, a 94% increase in those who thought that current business conditions had improved and a 54% increase in those who expected business conditions to improve over the next twelve months.  There were more moderate improvements in sentiment in Jamaica, St. Vincent & Grenadines and St. Lucia, while there were slight declines in Barbados and Dominica.