The BSP’s second Consumer Expectation Survey (CES) showed that the consumer expectations diffusion index (DI) remained negative in the first quarter of 2005 at 44.2 percent but there was a slight improvement compared to the negative 49.1 percent in the fourth quarter of 2004.
According to the BSP, there was a slight improvement in all components of the consumer expectations index such as family financial situation, level of family income and the economic condition of the country.
The CES is a supplementary survey to the Business Expectations Survey (BES) and the results are used in assessing the trend of domestic demand in relation to the conduct of monetary policy.
The result of the CES, however, indicated that pessimists still outnumbered optimists and the optimistic expectations were found mostly among families of overseas Filipino workers (OFWs) who are projecting improvements in their household income.
The BSP reported that respondents with positive expectations during the quarter anticipated increases in domestic and overseas income, wages and employment.
Meanwhile, those with negative expectations cited insufficient income and higher household expenditures as reasons.
The BSP said consumer optimism was expected to continue in the second quarter as the consumer expectations index also improved to -16.8 percent from -20.5 percent in the previous survey.
The 3.7 percentage point increase in the next quarter’s expectations was due primarily to the significant improvement in respondents’ expectations on the economic conditions of the country from -41.6 percent in the fourth quarter to -29.8 percent in the first quarter of 2005. Meanwhile, the BSP said family income and financial situation indices remained steady compared to the previous quarter.
"One-year ahead consumer expectations showed mixed signals," the BSP said. The overall diffusion index slightly declined from -16.7 percent in the previous survey to -18.4 percent due to lower expectations on the family financial situation and economic condition of the country.
Respondents’ expectations on the level of family income was very optimistic as it registered a positive and double-digit diffusion index of 11.7 percent in the next 12 months, up from 6.7 percent in the previous survey.
The BSP explained that family income was estimated to increase for the second quarter of 2005 by an average of 0.2 percent compared to the previous quarter.
The increase in income was expected to continue into the first quarter of 2006 as respondents estimated an average income growth of 2.3 percent.