Business confidence lowest in 2 1/yrs

MANILA, Philippines - Business confidence in the first quarter of 2014 fell to its lowest level in two and a half years, dampened by a weak peso and  a slowdown in consumer demand.

In the Business Expectations Survey released yesterday, the Bangko Sentral ng Pilipinas said the business confidence index (CI) dropped to 37.8 percent in the first quarter from 52.3 percent in the fourth quarter of last year. 

 â€œBusiness were less enthusiastic, with the headline reading lowest in 10 quarters,” Ma. Cyd Tuaño-Amador, BSP Assistant Governor, told reporters at a briefing. 

At the same gathering, BSP Department of Economic Statistics deputy director Teresita Deveza said the CI, although positive, is at its lowest since registering 34.1 percent in the third quarter of 2011. 

“Business confidence on the economy moderates but continues to be favorable in the first quarter of 2014,” Deveza said.

Deveza attributed the less upbeat outlook to “usual slowdown in business activity and moderation of consumer demand after Christmas, (and) the peso depreciation which would hurt importers.”

Moreover, she said the “rising prices of oil and other utilities, strong market competition, and lack of supply of raw materials” contributed to the fall of the index.

By sector, firms in the manufacturing; electricity, gas and water; financial intermediation; hotels and restaurants; real estate; and transportation had a less favorable outlook in the first quarter.

But those in mining and quarrying and agriculture; fishery and forestry; business process outsourcing; manpower providers; customer and technical support; health care; schools; and entertainment and amusement were more optimistic in the first quarter.

“Despite the less favorable overall outlook on the macroeconomy, the outlook of firms across sectors on their business operations was generally upbeat in the first quarter,” Deveza said.

However, the survey showed that businesses were more optimistic in the second quarter with CI of 50.8 percent. 

Companies turned more positive on expectations of brisker business during the harvest season, preparations for the upcoming start of the next school year and the increase in tourism receipts in the summer months, Deveza said.

“Respondents cited... the anticipated increase in demand during the secondary harvest season, graduation and enrollment periods, and summer season with the expected influx of both local and foreign tourists.”  .

At the same time, she said respondents noted the expected “brisker business arising from companies’ improved marketing strategies, and new construction projects for public and private, boosted by rehabilitation efforts from Typhoon Yolanda.”

The latest BES, conducted from Jan. 9 to Feb 20, surveyed a total of 1,525 firms with a response rate of 83.1 percent.