Economy showing signs of recovery in first quarter, says NSCB

MANILA, Philippines - The Philippine economy continued to show signs of recovery in the first quarter of the year, according to the National Statistical Coordination Board (NSCB), citing data from its 11 Leading Economic Indicators (LEIS).

According to the NSCB, the composite leading economic indicator has shifted direction and improved to 0.470 percent from a revised 0.473 percent in the fourth quarter of 2009.

“While the descent of the index began to slow down as early as Q3 2009, its directional shift in Q1 2010 confirms the definitive recovery of the Philippine economy from the global crisis,” it said.

During the period, the number of positive contributors remained at seven out of 11, similar to the fourth quarter of last year, from only four in the third quarter of 2009.

These positive contributors include consumer price index, total merchandise imports, wholesale price index, foreign exchange rate, hotel occupancy rate, number of new businesses and electric energy consumption.

Although the number of positive contributors remained the same, their combined share increased to 51 percent from only 34.1 percent in the fourth quarter of 2009.

The last time positive contributors outweighed their negative counterparts was in in the second quarter of 2008 with a 76.9 percent share.

Negative contributors during the first quarter of the year are the stock price index which is the largest negative contributor, tourist arrivals, terms of trade index and money supply.

These negative contributors accounted fo a 49 percent share of total contribution.

Jointly developed by the NSCB and the National Economic and Development Authority (NEDA), the LEIS serve as basis for short-term forecasting of the macroeconomic activity in the country. The NSCB has since been compiling data for the 11 identified leading economic indicators and generating the composite leading economic indicator on a quarterly basis.

According to the NSCB, the LEIS involves the study of the behavior of indicators that consistently move upward or downward before the actual expansion or contraction of overall economic activity.

The NSCB said the contribution of each 11 indicators is measured through the combined effects of the direction of the cycle component of each indicator and the correlation of their cycle components with that of the reference series.

“The system is based on an empirical observation that the cycles of many economic data series are related to the cycles of total business activity, i.e., they expand in general when business is growing and contract when business is shrinking.The LEIS was institutionalized to provide advance information on the direction of the country’s economic activity/ performance in the short run,” it said.