Consumers wary but businesses turn optimistic in Q4 — BSP poll

MANILA, Philippines — Consumers turned pessimistic while businesses were bullish on their prospects going in the final quarter of the year, the Bangko Sentral ng Pilipinas reported Friday.

A nationwide BSP survey of 5,495 households on October 1-13 revealed the overall consumer confidence index (CI) worsened to -24% in the fourth quarter, slipping from the already-dismal -19.3% in the previous quarter.

On the one hand, the October 8–November 18 BSP poll of 1,511 companies found that overall business CI turned positive again in the fourth quarter, a turnaround from a slight contraction in the third quarter.

A negative CI generally means pessimism prevailed during the period. In the case of consumer CI, the decline represents a generally bleaker outlook from the number of households, with pessimistic views overtaking those with optimistic views.

The BSP poll said the negative outlook of consumers in the fourth quarter emanated from fears surrounding a higher unemployment rate, low income, the pandemic situation as well as higher consumer inflation and a family member without work.

Meanwhile, firms' revert to optimism in the fourth quarter was largely due to the economic reopening, easing restrictions, better demand and sales, the vaccine rollout as well as the usual boost in demand from the holiday season.

For the first quarter of 2022, consumer sentiment improved as the CI rose 9.3% from 2.7% recorded in the third quarter poll. Optimism prevailed as households' CI for the next 12 months climbed up 23.6% from 18.6% in the previous quarter's survey results.

Likewise, businesses were positive that recovery would be insight in the first quarter of 2022 as CI surged 52.8% from 31.9% in the previous quarter. The next 12 months would be better for companies, as overall CI grew 67.6% from 56% in the preceding quarter's result.

Sought for comment, Michael Enriquez, chief investment officer at Sun Life Investment Management and Trust Corp. explained the disparity between consumer and business sentiment in the fourth quarter was due in part to uncertainty.

"I think there is a timing issue because during Q3, we were experiencing the highest COVID cases and uncertainty was still prevalent," Enriquez said in a Viber message.

Enriquez is banking on more firms and businesses to hire more people and expand as sentiment improves. For Nicholas Antonio Mapa, senior economist at ING Bank in Manila, the national government's vaccine rollout is crucial to maintain this upbeat outlook.

"Business sentiment improved considerably as the economy reopens which can hopefully be sustained for as long as we keep our covid cases in check. Vaccination will be key," Mapa said in a Viber message. 

"Consumers on the other hand remain cautious as despite better growth numbers, unemployment and inflation remain a concern. Also, households have been utilizing loans to cover expenses at a higher rate suggesting that bank loans have helped support spending amidst the recovery," he added.