By Lee C. Chipongian
Filipino businessmen turned less optimistic for the third quarter due to seasonal factors, but consumer sentiments improved on perceived higher income and a generally more peaceful environment, a central bank quarterly survey showed.
The Bangko Sentral ng Pilipinas (BSP) released two surveys Thursday, the Business Expectations Survey (BES) and the Consumer Expectations Survey (CES), which showed mixed results.
The BES indicated an overall confidence index (Cl) of 37.3 percent which was lower than 40.5 percent in the second quarter 2019. The weaker business sentiments was due to the following: Seasonal factors such as slack in the demand and slowdown of business activities during the rainy season; decline in orders leading to lower sales; lack of supply of raw materials; and perceived unfavorable effects of various government policies including the rice tariffication law, banning of provincial buses on EDSA and stiffer competition.
As for CES, the overall consumer confidence index rebounded to positive territory at 4.6 percent from -1.3 percent in the second quarter this year, according to BSP officials.
The optimistic outlook was due to: Improvements in the peace and order situation; availability of more jobs; additional and high income; and good governance.
The CES results showed that for the next quarter, the consumer confidence was also “more upbeat” than in the third quarter. “Likewise, consumer optimism for the next 12 months improved as the Cl increased to 29.8 percent from the second quarter 2019 survey result of 25.2 percent for the next 12 months … (more) buoyant sentiment for the fourth quarter and the next 12 months stemmed from households’ anticipation of availability of more Jobs, additional and high income, good governance and stable prices of goods,” the BSP said.
As for the business outlook, the fourth quarter seemed more upbeat with a CI of 56.1 percent compared to the previous survey’s 47.6 percent. It was actually the highest next quarter CI since the last quarter of 2016.
Businessmen’s positive outlook for the fourth quarter was due to expectations of higher consumer demand during the holiday and harvest seasons; continued increases in orders and projects; more favorable macroeconomic conditions such as lower inflation, stable exchange rate and lower interest rate; higher government spending/infrastructure; and business expansion.
“The survey results showed that businesses expect the peso to appreciate, but inflation and interest rates to decrease for the third quarter 2019,” said BSP officials. For the next quarter, businessmen thinks the peso will appreciate, inflation will rise, but interest rates will fall in the last quarter of the year.
Consumer confidence, as measured by the BSP survey, includes consumers’ outlook on the country’s economic condition, family financial situation and family income. For the next quarter and the next 12 months, consumer sentiment was more optimistic across the three component indicators compared to the second quarter results, said the BSP.
The central bank said consumers cited expectation of better peace and order situation, availability of more jobs and additional income as common reasons for their boosted sentiment. “Moreover, the consumer confidence for high-income group was more favorable due to expectations of higher income and additional working family members. Meanwhile, the Cl for low-income group was less negative as they anticipated good governance and effective government policies and programs,” said the BSP.