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  • Writer's pictureZiggurat Realestatecorp

Business optimism dips; consumers less gloomy

Business optimism fell in the third quarter while consumer sentiment became slightly less negative, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

At 35.8, the confidence index (CI) for businesses declined from 40.8 previously while that for consumers improved slightly to -9.6 percent from -10.5 percent, results of the BSP's latest business and consumer expectations surveys showed.

A positive result means that optimists outnumbered pessimists. The reverse applies with regard to negative CIs.

The reduced business confidence for the current quarter, the BSP said, stems from a drop in sales and demand for goods and services due to weather-related disruptions and other seasonal factors, higher prices of raw materials and production costs, elevated inflation and interest rates, and a weaker peso.

As for consumers, the reduced pessimism was attributed to the availability of more jobs and permanent work; higher income from wages, remittances and other sources; and more family members having found employment.

For the next three months and the year ahead, meanwhile, the CIs for business rose to 53.8 and 59.7, from 46.4 and 58.5, respectively.

The more bullish outlook for the fourth quarter was said to stem from expectations of increased demand for products and services, and higher revenues, better economic conditions amid the lifting of the state of public health emergency, expansion and business opportunities, and new customers and projects.

For the next 12 months, meanwhile, respondents also tagged demand for goods and services across all sectors, an improved business climate, further expansion and new business opportunities, additional clients and projects, and lower inflation as reasons for the higher optimism.

As for consumers, sentiment improved with a CI of 7.8 percent from 4.6 percent for the fourth quarter. Optimism, however, fell with regard to the next 12 months as the CI declined to 18.9 percent from 20.5 percent.

Fourth-quarter confidence was said to have been boosted by expectations that more jobs would become available, additional sources of income, higher incomes, salary increases and stable prices of goods.

For the next 12 months, however, sentiment fell on concerns over faster increases in prices of goods and higher household expenses, fewer available jobs, lower incomes and the effectiveness of government policies and programs.

Business sentiment across all sectors, meanwhile, was less upbeat in the third quarter, the BSP said. The CIs of the industry, services, and wholesale and retail trade sectors declined while that for the construction sector rose.

The outlook across all types of trading firms was also generally less bullish for the period, particularly for importers, exporters, dual activity and domestic-oriented firms.

Capacity utilization dipped for the third quarter, hitting 70.5 percent for the industry and construction sectors from 71 percent three months earlier.

Still, firms expect financial conditions and access to credit to remain tight for the July to September period as their corresponding indices became less negative, the BSP said.

Businesses see the peso gaining versus the dollar and the peso borrowing rate rising.

As for inflation, they expect the rate to stay above the BSP's 2.0- to 4.0-percent target, averaging 5.9 percent for both the third and fourth quarters and 5.7 percent in the year ahead.

As for consumer expectations, overall sentiment improved with regard to the country's economic condition, fell in terms of family financial situation and was steady for family incomes

Broken down, the low-income and high-income groups were less pessimistic but sentiment worsened among middle-income earners.

Consumers were also less pessimistic with regard to buying big-ticket items but the CI stayed negative at -62.7 percent.

Loan availments rose among households, to 26.6 percent from 24.8 percent in the second quarter, but the proportion of those with savings improved to 32.8 percent from 30.2 percent.

Consumers expect the peso to weaken and interest rates, inflation and unemployment to rise in the third quarter. The pessimistic outlook for both inflation and the peso extended to the next three months and the year ahead.

The outlook for inflation was an above-target 6.6 percent for the next 12 months.

Unemployment, meanwhile, is expected to stay steady in the fourth quarter and fall in the year ahead.

Source: Manila Times

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