Business confidence improved in May as firms turned more optimistic about consumer spending, corporate earnings, and the broader economic outlook, according to the latest Business Expectations Survey released by the Bangko Sentral ng Pilipinas (BSP).

The overall Business Confidence Index for the current month improved to -25.2 in May from -35.8 in April, although the reading indicates that businesses remain generally pessimistic. Firms, however, turned optimistic about the next three months, with the CI rising to 0.6 from -7.5, while the 12-month outlook strengthened to 27.8 from 19.5.

Stronger consumer spending

The BSP said businesses expect stronger consumer spending to support revenues and profitability. Firms also anticipate lower fuel prices and easing tensions in the Middle East over the next year, contributing to a more favorable economic outlook and improved investor confidence.

Reflecting the brighter outlook, more businesses said they plan to hire additional workers over the next three and 12 months as they expect business activity to increase. However, fewer manufacturing and industrial firms indicated plans to expand operations, citing continued uncertainty.

Inflation to remain elevated

Despite improving sentiment, businesses expect inflation to remain elevated over the next 12 months and stay above the BSP’s 4 percent upper tolerance limit, driven by concerns over higher input costs.

The BSP said it continues to monitor the impact of the Middle East conflict on domestic prices, economic activity, and business sentiment.

The central bank added that shifting to a monthly Business Expectations Survey beginning in January 2026 enables it to track business conditions more closely and respond more quickly to evolving domestic and global developments.