Business confidence hits 3-yr low

MANILA, Philippines - The business confidence index slid to a three-year low in the third quarter amid higher cost of raw materials, the truck ban and port congestion, the Bangko Sentral ng Pilipinas said.

The latest Business Expectations Survey showed a confidence index of 34.4 percent, well below the 50.7 percent recorded in the second quarter.

This is lowest level since the 34.1 percent posted in the third quarter of 2011, central bank data showed.

The BSP said the less bullish outlook was due to the seasonal lack of demand amid the rainy season, the rise in commodity prices, and even the increase in overhead costs.

Respondents also blamed the truck ban and port congestion in Metro Manila, and the ongoing controversies on the Priority Development Assistance Fund (PDAF) and Disbursement Acceleration Program (DAP).

The sentiment of local firms mirrored the less bullish outlook in the United Kingdom, Canada, Germany, New Zealand, Singapore, Hong Kong and India. Businesses in the US and in China gave more optimistic views.

The survey showed the less favorable outlook was observed across sectors during the third quarter.

Construction firms had a less bullish outlook amid foreseen slowdown in construction activities due to the rainy season while the wholesale and retail trade sector blamed the seasonal slack in demand for its less sanguine outlook.

Industry firms were also less optimistic in the third quarter on the back of a slack in production activities, stiff competition, an increase in the cost of raw materials, and the truck ban and port congestion.

The services sector had a more upbeat outlook, driven by the optimism among hotels and restaurants.

For the fourth quarter, businesses were more optimistic as the index hit 52.9 percent.

“Respondents’ more positive outlook in the fourth quarter was due to expectations of brisker business in view of the expected increase in consumer spending during the holiday season, [and] expansion in retail trade, infrastructure, power and telecommunication, education, and health care businesses,” the BSP said.

Moreover, this was due to “higher exports of garments and metals with the recovery global markets, and increase in orders for manufacturing products leading to higher volume of production.”

The latest BES, conducted from July 1 to Aug. 15, surveyed a total of 1,527 firms.