Q4 business mood upbeat as consumer confidence softens

The sentiment among the various businesses in the country remains buoyant in the final three months of the year although households across the country, while still upbeat, weakened during the same period, the Bangko Sentral ng Pilipinas (BSP) reported in the latest business (BES) and consumer expectations surveys (CES).

Data from the BES showed that overall confidence index (CI) among local businesses stood 40.2 percent, a slight improvement from only 37.3 percent in the previous quarter.

“Respondents attributed their more optimistic sentiment for the quarter to higher consumer demand during the holiday and harvest seasons, increase in sales, orders and projects, more favorable macroeconomic conditions, higher government spending and business expansion,” the BES said.

According to the BSP, this was reflective of the higher increase in the percentage of optimists outweighing the increase in the percentage of pessimists from the previous quarter’s survey results.

The sentiment of businesses in the Philippines mirror the buoyant business outlook in Brazil, Chile, Hungary and the Netherlands and unlike the confidence of businessmen in Bulgaria, Croatia, Greece, Israel, Norway and Ukraine which proved less optimistic.

Looking forward to the next 12 months, the view among businessmen in Philippine edged forward as well from only 58.6 percent to 59.6 percent.

Local household confidence from which come consumers, while still broadly optimistic, slowed during the period as indicated by the consumer index moderated to only 1.3 percent from 4.6 percent a quarter earlier.

The BSP said the consumers’ less favorable outlook for the period was due to the following concerns: higher prices of commodities, low or no increase in salary/income, increase in household expenses and high unemployment rate.

For Q1 2020, consumer sentiment remained steady as the CI showed only a 0.1 percentage point (ppt) decline to 15.7 percent from the Q3 2019 survey result of 15.8 percent for Q4 2019.

Consumer outlook for the next 12 months was less optimistic as the CI decreased to 26.4 percent from the Q3 2019 survey result of 29.8 percent for the next 12 months.

Similar to Q4 2019, the lower CI for Q1 2020 and the next 12 months stemmed from households’ anticipation of: (a) higher prices of commodities, (b) no or low increase in salary/income, (c) high unemployment rate, and (d) increase in household expenses, the BSP said.