Filipinos turn bullish, firms less optimistic

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FILIPINOS turned bullish for July-September after 12 months of pessimism, marking the best result in seven quarters, while companies’ confidence eased from the preceding three months, according to the central bank’s latest consumer and business expectation surveys released on Thursday.

The third-quarter Consumer Expectations Survey showed the overall confidence index (CI) at 4.6% in the current quarter, capping four straight quarters of pessimism and marking the best result since the 9.5% recorded in 2017’s last three months.

The “next quarter” CI came in at 15.8%, the best reading in seven quarters or since the 17.5% recorded in 2017’s last three months.

Consumers’ third-quarter CI for the “next 12 months” was the best so far this year at 29.8%, though it was lower than the year-ago 13%.

On the other hand, the third-quarter Business Expectations Survey put the overall CI at 37.3% for the current quarter, lower than the second quarter’s 40.5% though still better than the year-ago 30.1%.

The “next quarter” expectation level was at 56.1%, better than the second quarter’s 47.6% and the year-ago 42.6% and the best reading in three years or since the 56.8% recorded in 2016’s third quarter.

The Bangko Sentral ng Pilipinas (BSP) explained in the separate reports that a positive overall index means that optimists among respondents outnumbered pessimists.

The latest consumer survey was conducted among 5,488 households nationwide last July 1-13, while the business survey was conducted on July 10-September 10 among 1,487 firms surveyed nationwide from the combined list of the Securities and Exchange Commission’s Top 7,000 Corporations in 2010 and BusinessWorld’s 2017 Top 1,000 Corporations in the Philippines.

The overall consumer CI is computed as the average of three indices, namely: perception on general economic condition of the country, family financial condition and family income.

The BSP attributed consumers’ overall optimism this quarter to improved law and order, availability of more jobs, good governance, as well as additional and higher income.

For the next quarter and the year ahead, consumer confidence improved on the back of availability of more jobs, additional and high income, good governance and stable prices of goods.

The report also noted that consumer confidence in Metro Manila was at a record-high 13.2%, while the reading in areas outside the National Capital Region (NCR) turned positive at 3.2% after four straight quarters of negative readings and was the best result in seven quarters or since the 9.9% recorded in 2017’s final three months.

Households’ spending outlook for the next quarter improved to 36.2% from 32.7% in the previous survey, suggesting “that more respondents continue to expect higher spending on basic goods and services compared to those who said otherwise” and “that growth in consumer spending may increase in the next three months.”

The percentage of households that considered this quarter as a good time to buy big-ticket items steadied at 28.9% from 29.6% in the second quarter, and was “broadly steady for purchase of motor vehicles, more favorable for consumer durables, but less upbeat for real properties.”

Businessmen asked in the latest survey turned less optimistic, citing seasonal factors like a slack in demand and business slowdown amid the rains, smaller sales due to a decline in orders, lack of supply of raw materials, stiffer competition and perceived unfavorable effects of various policies like the liberalization of rice importation and ban on provincial buses along EDSA, the central bank reported.

Business outlook improved for the quarter ahead, however, due to expected better consumer demand during the harvest and the approaching Christmas holiday, increases in orders and projects, more favorable macroeconomic conditions like slower inflation, lower interest rates and a stable foreign exchange rate, business expansion and bigger state spending especially on infrastructure.

The BSP noted that respondents’ outlook steadied in Metro Manila at 40.4% from 40.6% in the second quarter, but was “less optimistic” at 31.9% from 40.3% in areas outside the NCR.

Employment outlook for the succeeding quarter remained positive though lower at 19.6% in the latest survey compared to 26% in the preceding survey and 26.3% a year ago, suggesting “that more firms will continue to hire new employees, although the number that said so are lower compared to the Q2 2019 survey result.”

Moreover, the reading on expansion plans was lower at 30.4% from 33.5% in the second quarter and 36.1% a year ago.

Business Expectations Survey