Firms put expansion plans on hold in Q4 — survey

More companies are putting on hold expansion plans, but are likely to hire additional workers in the fourth quarter.

Francisco Dakila Jr., managing director of the BSP’s Monetary Policy Sub-Sector, said results of the Business Expectation Survey (BES) for the third quarter showed the percentage of businesses with expansion plans in the industry sector decreasing to 32.8 percent from 34.6 percent in the previous quarter.

“Among sub-sectors, agriculture, fishery and forestry, and mining and quarrying recorded stronger expansion plans while those of manufacturing, and electricity, gas and water were slightly lower from a quarter ago,” Dakila said.

On the other hand, Dakila reported the employment outlook index for the next quarter improved to 27.3 percent from 24.7 percent in the previous quarter due largely to the more positive sentiment of the services and wholesale and retail sectors, offsetting the less optimistic outlook of the industry and construction sectors.

“This suggests that more firms will continue to hire new employees than those that indicated otherwise,” he said.

Dakila pointed out the survey showed the volume of business activity index rose to 49.6 percent from 44.7 percent.

He added the average capacity utilization in the industry and construction sectors rose to 76.7 percent in the third quarter from 75.8 percent in the second quarter, indicating sustained volume of business activity.

For the fourth quarter, Dakila said businesses are more optimistic as the confidence index rose to 51.3 percent from 42.7 percent in the previous quarter’s survey.

The optimism was traced to the uptick in consumer demand during the holiday, harvest and milling seasons; the continued roll-out of government infrastructure and other development projects; continued increase in orders and projects translating to higher volume of production; as well as the expansion of businesses and new product lines.

Respondents, he added, also cited the introduction of new and enhanced business strategies and processes; expected favorable weather condition for agricultural products; and positive impact of the proposed tax reform program.