Business outlook more optimistic in Q4 – BSP survey

Filipino businessmen are more confident they will have improved profits for the fourth quarter which traditionally, is the busiest time of the year, activity-wise.

Based on the Bangko Sentral ng Pilipinas (BSP) Business Expectations Survey (BES) for the fourth quarter, business outlook is better with an overall confidence index (Cl) of 43.3 percent from 37.9 percent in the previous survey.

For the next quarter which the BES also cover, it is less optimistic with CI down to 39.7 percent from 51.3 percent. This outlook was due to an expected slowdown of demand following the Christmas or holiday season. “Other reasons cited by firms were lag in business transactions at the beginning of the year (delay in renewal of contracts and drydock season for the shipping industry), stiffer business competition, concerns on the effect of the new excise tax rates to the automobile industry, and higher inflation,” said the BSP.

For the current quarter, in the meantime, businessmen attributed their improved outlook on the following: Expected increase in orders and consumer purchases during the Christmas holidays; increasing number and expansion of businesses; and higher disbursements for the government’s infrastructure and other development projects.

They also consider the favorable macroeconomic conditions in the country, particularly manageable inflation and low interest rates, and expansion of export markets and stronger demand for Philippine products, according to the BSP.

Generally, businessmen expect a predictable economic environment, with inflation seen to remain within the government target band of two percent to four percent.

“Businesses anticipated inflation to increase but to remain within target, peso to depreciate, and interest rates to go up for the current and next quarters,” said the BSP.

The BES also noted the exporters outlook during the quarter which were “most bullish” with a record-high confidence level for the second consecutive quarter at 50 percent. “Likewise, domestic-oriented firms as well as importers were more optimistic. However, the outlook of dual-activity firms was less upbeat. For the quarter ahead (first quarter 2018), the sentiment across different types of businesses was less optimistic,” said the BSP.

The services and wholesale and retail trade sectors are more confident while industry and construction are less positive, the report continued.

In the meantime, sentiment was high across the services sub-sectors, with hotels and restaurants posting the highest confidence index, reaching a two-year record-high at 73 percent, the BSP added.

As for the employment outlook index for the next quarter, this declined to 24.7 percent from 27.3 percent in the previous tally. “This indicates that more firms will continue to hire new employees than those that indicated otherwise even as the number of firms with hiring intentions declined relative to a quarter ago.”

The fourth quarter BES was done on October 2 to November 20 and surveyed 1,473 firms nationwide.