Consumer optimism improves, but businesses turn pessimistic in Q3

MANILA, Philippines — Consumers were cautiously optimistic while businesses turned gloomy in the third quarter, as pandemic uncertainties persist, the Bangko Sentral ng Pilipinas reported Friday.

A nationwide BSP survey of 5,670 households on July 1-14 showed the overall consumer confidence index (CI) remained in the red at -19.3% in the third quarter, which was nevertheless an improvement from the -30.9% contraction in the preceding quarter.

On the other hand, a July 22-September 15 central bank poll of 1,511 companies showed the overall business CI declined -5.6% in the third quarter, reversing three consecutive quarters of positive reading.

Generally, a negative CI means pessimists trumped optimists during the period. In the case of consumer CI, the improvement in the third quarter reading indicates that the number of households with upbeat sentiment increased quarter-on-quarter, but was still less than those with bleak views.

According to the central bank, consumers attributed their improved outlook in the third quarter to availability of more jobs and more working family members, as well as higher income and “effective” government policies and programs, particularly in addressing the pandemic.

Meanwhile, the sour business sentiment during the period was due to the lingering pandemic and the re-imposition of hard lockdowns in the capital that disrupted their operations again. Companies were also worried about higher prices of raw materials and how the government is tackling the health crisis.

For the final quarter of the year, consumer sentiment improved as the CI increased to 2.7% from 1.3% recorded in the second quarter poll. However, the guarded optimism is still in play as households’ CI for the next 12 months declined to 18.6% from the previous quarter’s survey result of 19.8%.

Similarly, overall business CI for the fourth quarter increased slightly to 31.9%, from 31.4% earlier. For the next 12 months, the index went up 56% from the previous survey result of 52.5%.

Sought for comment Jun Neri, lead economist at the Bank of the Philippine Islands, said the fourth quarter results will be “different” since the government modified its policy on quarantine restrictions.

“The recent shift to granular quarantines, faster pace of vaccinations, and the partial reopening of some high-contact industries like restaurants will likely boost the next survey results,” Neri said in a Viber message.

“In contrast, since consumers will be facing higher utility, transport, and food price, we may see rising inflationary expectations somewhat dampening household spending sentiment in the forthcoming results,” Neri added.