Consumer confidence still down, but businesses more upbeat in Q2

MANILA, Philippines — Consumers stayed pessimistic in the second quarter as stubbornly high inflation crimps household budgets, while businesses were more upbeat as they expect demand to remain firm despite rising prices.

A nationwide poll of 5,548 families showed the consumer confidence index (CI) was relatively “steady” at -10.5% in the second quarter, the Bangko Sentral ng Pilipinas reported Friday.

That the CI stayed in the negative territory means the pessimists continued to outnumber the optimists.

Explaining the results, the BSP said inflation remains the top concern for consumers, who also said they are worried about “lower income” and “fewer available jobs”.

The respondents were also skeptical of the effectiveness of government actions to tame inflation and create more well-paid jobs for everyone.

Worse, consumers were less confident for the third quarter and the next 12 months, as the CIs declined to 4.6% and 20.5% — from 7.5% and 22.7% — respectively.

Government data showed inflation eased for the fourth straight month in May at 6.1%, prompting the central bank to hold off any rate hikes in its last two meetings as the ultra-tight monetary policy settings work its way to the domestic economy.

Despite the rising borrowing costs, the BSP said the percentage of households with loans increased to 24.8% in the second quarter, from 22.8% in the preceding three months.

But the percentage of households with savings decreased to 30.2% in the second quarter, from 32.9% in the first quarter.

Businesses more upbeat

A separate BSP poll of 1,549 companies nationwide showed the business CI rose to 40.8% in the second quarter, from 34.0% previously.

The latest reading means there was an increase in the percentage of optimists and a decrease in the proportion of pessimists during the quarter.

The respondents attributed their optimism to expectations of “increase in sales and production due to stronger demand” and “continued post-pandemic recovery”.

The rosier sentiment of companies also stemmed from “easing inflation” and seasonal uptick in demand for certain goods and services during the summer.

However, the business sentiment for the third quarter was less buoyant as the overall CI declined to 46.4%, from 49% in the previous quarter.

The business CI for the next 12 months also sagged to 58.5% from 61.9%.

The BSP attributed the less optimistic business outlook in tight financial condition as a result of the rate hikes meant to fight inflation, which could hamper expansion plans and hurt consumer demand.