Jersey Reports Muted Business Optimism

by Amanda Banks, Tax-News.com, London

16 April 2010

Business activity in Jersey reduced during the first three months of 2010, according to a qualitative survey of the island’s business leaders by Jersey Finance.

According to the all-sector Business Activity Indicator, in the three-month period to March 2010, the number of businesses reporting a decrease in business activity over those reporting an increase rose by 15%. The response from the finance sector was more positive with 14% more respondents stating that conditions had improved than had reported that business activity had declined. Just over two-fifths of respondents reported little or no change.

Of the ten indicators that make up the survey, across the whole economy nine of the ten all-sector indicators had a negative tendency in March 2010, with three indicators (Business Activity, Capacity Utilization and Input Costs) having seen an ongoing decline over the last three quarters. The Finance sector had a more positive tendency for eight of the ten indicators than the non-finance sectors in March 2010.

In the previous quarter’s survey, there was a high expectation from the finance sector for Future Business Activity in December 2009. Such optimism materialized to some extent in the March round of the survey, which saw the Business Activity and New Business indicators improve by 14% and 20%, respectively. In Q1 2010’s survey, the Future Business Activity indicator is lower at 29%, revealing less optimism among business leaders but nevertheless businesses were positive about prospects going forward.

In the finance industry, smaller companies (those with less than 50 full-time equivalent employees) had positive indicators for current Employment and Future Employment, of 7% and 15% respectively. In contrast, the larger firms had negative tendencies for these indicators (-25% and –5%, respectively), reflecting the results of the Jersey Manpower Survey December 2009, which revealed that decreases in staff numbers had occurred primarily in the banking sub-sector.

Lastly, profitability remains strongly negative in all sectors, including the finance sector, despite business leaders reporting that conditions had improved slightly on the last two quarters' results. The smaller companies in the sector had a less negative Profitability indicator than the larger companies (-5% compared with –25%).

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