Businesses turn more optimistic

Stronger demand, holiday prospects

MANILA, Philippines — Businesses turned more optimistic about the months ahead as firms anticipated stronger consumer demand and increased activity during the holiday season, while households were less pessimistic about their prospects.

Results of the Bangko Sentral ng Pilipinas (BSP)’s latest Business Expectations Survey (BES) showed the confidence index (CI) for the next three months rose to 24.6 percent in August from 3.7 percent in July.

The index measures the balance between businesses with positive and negative views, with a positive reading indicating that optimists outnumber pessimists.

The BSP said firms were more optimistic about November due mainly to “stronger demand for consumer and financial products and services,” cited by 52.9 percent of respondents with a positive outlook.

It was also due to an “uptick in business activities amid the holiday and rice harvest season,” as cited by 23.5 percent of respondents.

Business sentiment for the next 12 months also strengthened, with the CI climbing to 36.4 percent from 29.4 percent in July.

Firms attributed the improved year-ahead outlook to expectations of stronger consumer spending in tourism, construction, education and financial activities, easing inflation, a possible resolution of the Middle East conflict, improved business operations and stronger investor confidence.

For August itself, businesses remained pessimistic, although the CI improved to -10.9 percent from -20.3 percent in July. The BSP said the improvement reflected higher demand for goods and services, particularly essential commodities, loan products and construction activities.

Employment prospects also improved, as the index measuring hiring intentions over the next 12 months jumped to 30.7 percent from nine percent. However, the share of industry firms planning to expand operations fell to 17.1 percent from 20.8 percent.

Meanwhile, the BSP’s Consumer Expectations Survey (CES) showed households becoming less pessimistic in the third quarter.

The consumer CI improved to -29.8 percent from -42 percent in the second quarter, driven by expectations of higher earnings, new income sources and stable jobs.

For the fourth quarter, the index rose sharply to -0.8 percent from the previous survey’s -16.3 percent forecast, although pessimists still slightly outnumbered optimists.

Consumers turned more optimistic about the next 12 months, with the year-ahead CI improving to 9.1 percent from 0.2 percent.

The BSP said the more upbeat outlook reflected expectations of “higher earnings,” “new income sources” and “perceived improvements in governance, accountability and leadership.”

The August BES was conducted from Aug. 5 to 31, covering 501 firms nationwide. Meanwhile, the third-quarter CES was conducted from July 1 to 13 and covered 5,476 households.