Consumers upbeat; firms optimistic — BSP

Consumers and businesses indicated optimism in the fourth quarter due to the expected increase in incomes, while prices of goods and services are on a downswing, a survey by the Bangko Sentral ng Pilipinas (BSP) showed Friday.

However, in the next 12 months, businesses feel more upbeat that the economic conditions will remain favorable based on the BSP Consumers and Businesses Expectations Surveys for the Third Quarter.

For the rest of the year, BSP said more consumers see an improved economy as their overall confidence index (CI) rose to 0.7 percent from negative 0.4 percent in the survey conducted in the second quarter.

The new CI is an improvement from negative 15.6 percent the BSP registered for consumers’ expectations for the third quarter and negative 20.5 percent for the second quarter.

Consumers said they expect higher wages, more income sources and opportunities for permanent jobs, and more family members to work this year.

Thus, BSP said more consumers plan to buy big-ticket items in the next few months as their CI rose to  42.6 percent from 39.6 percent.

However, for the next 12 months, fewer consumers are optimistic about the economy as they expect higher prices of goods and services, lower incomes, and corruption in the government.

As a result, their CI declined to 9.9 percent from 13.5 percent.

“In particular, buying intentions for the next 12 months were less pessimistic for motor vehicles, while that of consumer durables and houses and lots were little changed,” BSP said.

These results came after inflation in July jumped to 4.4 percent from 3.7 percent in June based on data from the Philippine Statistics Authority. Moreover, BSP only cut its benchmark for lending rates last month.

Long lag before felt

BSP Governor Eli Remolona Jr. said policy rates tend to have a “long lag” before its desired effect of lowering prices takes effect.

“Potential minimum wage adjustments could also give rise to second-round inflationary effects,” he added.

“The percentage of households that plan to buy real property within the next 12 months slightly decreased to 4.2 percent from 4.7 percent,” BSP said.

Amid the still high inflation rates in the third quarter, the number of households with savings slightly declined to 28.7 percent from

29.3 percent.

BSP said only 30 percent of households said they would save at least 10 percent of their monthly income.

For the rest of the year, consumers expect higher prices of food and utilities,  limited supply of goods and services, worries over government policies and programs on price reductions and depreciation of the peso against the US dollar.

For the next 12 months, consumers see inflation to average at 5.9 percent or higher than the BSP target of 2 to 4 percent.

Businesses upbeat

More firms’ are optimistic about the economy for the rest of the year as their overall CI improved to 56.8 percent from 43.7 percent.

For the next 12 months, more businesses shared a positive outlook as their CI rose higher to 58 percent from 56.5 percent.

These data showed continued optimism from the CI for the third quarter at

32.9 percent, slightly up from 32.1 percent.

BSP said firms see higher demand for products and services during the holiday season, lower interest rates, and easing inflation.

“The more upbeat sentiment in the industry was seen in wholesale and retail trade, and services sectors. Meanwhile, firms in the construction sector cited lack of new clients,” BSP said.  

Consumer demand for most goods and services will likely grow as small and large businesses project better employment rates and more enrolled students until the next 12 months.