Rainy season to dampen consumer spending in Q3

CEBU, Philippines - While Filipino consumers showed confidence in the first two quarters of this year, the threat of slower economic activity, and the projected rainy season is seen to pull down the active spending attitude towards the second semester and the rest of the year.

Latest report from the Bangko Sentral Ng Pilipinas revealed that for the next quarter (third quarter) and the year ahead, consumer sentiment turned less upbeat as the Consumer Index declined to a neutral value of zero percent (from 5.4 percent in the first quarter 2014)  and 15.9 percent (from 19.3 percent in fisrt quarter this year), respectively.

Based on the survey, the less optimistic outlook stemmed from expectations of lower income due partly to poor harvests and slower business activities during the rainy season which could cause interruptions.

The respondents also cited other reasons for their less favorable outlook, their anticipations of higher household expenses such as education and maintenance medicine, and less job opportunities, consistent with their views of higher unemployment over the next 12 months.

The overall consumer confidence is measured using three indicators-economic condition of the country, family financial situation and family income.

For the current quarter, respondents were more confident about the country's economic condition and their family income. Meanwhile, their outlook on family finances remained unchanged.

For the next quarter and the year ahead, consumer sentiment on all three indicators turned less positive in view of the anticipated slowdown in economic activity during the rainy season as well as the lingering issues on graft and corruption in the government.

On the buying sentiment, the positive outlook of respondents on basic goods and services remained steady in the third quarter this year. Across commodity groups, fewer respondents expected higher spending on clothing and footwear, house rent, electricity, fuel, medical care, communication, restaurants and cafes, and personal care and effects while more respondents anticipated an increase in expenditures on food, water and education due largely to the opening of the school year.

The outlook on buying conditions for real estate was the most optimistic, posting a record high of 32.2 percent since first quarter of 2007, while a stable outlook was observed for buying conditions for consumer durables and motor vehicle. (FREEMAN)