Business outlook improves in Q4

As consumer confidence weakens

The Bangko Sentral ng Pilipinas (BSP) said business outlook is better in the last quarter of the year as optimists viewed the higher flow of funds during the holidays as translating to more trade and business activities.

The BSP’s latest Business Expectations Survey (BES) said the overall confidence index (CI) increased to 40.2 percent from 37.3 percent in the previous quarter (third quarter).

Businessmen’s optimistic sentiment was because of the following: Higher consumer demand during the holiday and harvest seasons; increase in sales, orders, and projects; more favorable macroeconomic conditions (higher GDP growth and lower inflation and unemployment rates); higher government spending, mainly in infrastructure; and business expansion.

However, the BSP said the BES results are less optimistic for the first quarter of 2020 and the CI “weakened” to 40.3 percent from 56.1 percent in the fourth quarter.

Cited reasons for the less optimistic outlook were: Lower consumer demand after the holiday and harvest seasons; decline in sales and orders; stiffer competition; and other factors such as rising prices,

concerns over the African Swine Flu epidemic, and fishing ban period.

In the meantime, the business outlook on the country’s economy was more positive for the next 12 months, said the BSP.

“(The) more optimistic outlook of the respondents for the next 12 months was attributed to expectations of sound macro fundamentals (more stable economic growth and lower inflation and interest rates),” said the BSP. It added that the “increase in consumer demand, higher government spending on infrastructure, development of new product lines/models and marketing and business strategies, business expansion and incoming new projects, clients and prospective customers” were also positive factors for businessmen.

As for consumer confidence, the BSP’s Consumer Expectations Survey (CES) showed a drop in CI to 1.3 percent from 4.6 percent in the third quarter.

The BSP said the less favorable outlook for the fourth quarter came from: the higher prices of commodities; low or no increase in salary/income; increase in household expenses; and high unemployment rate.

The overall consumer CI measures the average direction of change in three indicators overall condition of the economy, household finances, and household income, said the BSP.

For the first quarter 2020, the central bank said consumer sentiment remained steady as the CI showed only a 0.1 percentage point decline to 15.7 percent from the previous survey of 15.8 percent.

The BSP said consumer sentiment were all weak for all three indicators namely, the country’s economic condition, family financial situation, and family income. For the next quarter, consumer sentiment across component indicators was “generally steady”.

The CES was conducted between October 1 to 12 and included 5,648 households.

The BES, on the other hand, was done October 3 to November 25 and covered 1,477 firms surveyed nationwide.