Top firms expect slowdown, less hiring in '09 - BSP

MANILA, Philippines – The country’s top corporations expect the economy to slow down in the first quarter of 2009 and few of them are planning to hire new employees as they anticipate low demand, higher borrowing costs and low growth prospects.

The Bangko Sentral ng Pilipinas (BSP) released the results of its fourth quarter Business Expectations Survey (BES) yesterday which showed a slight improvement in sentiments in the fourth quarter but a marked dip for the first quarter of 2009.

The BES is a quarterly survey asking the country’s top corporations about their outlook on the current quarter and the following quarter. The results of the survey have been in the negative zone since early this year, indicating a general pessimism in the business sector.

The Confidence Index of the BES remained firmly in the negative zone at -6.8 percent for the fourth quarter and -0.5 percent in the first quarter of 2009.

According to the BSP, there was a quarterly improvement in the pessimism level from the third quarter, owing mainly to the steady decline in oil prices. Businesses were also less pessimistic in the fourth quarter because demand was expected to pick up during the holiday season.

“These results are consistent with other surveys,” said Iluminada Sicat, director of the BSP’s Department of Economic Statistics. “Basically, people are less pessimistic because they expect inflows from overseas Filipinos to pick up during the holidays and that would fuel demand.”

According to Sicat, the BES results indicated that the employment outlook was negative for the first quarter of 2009 which meant that more firms planned to freeze hiring, with sentiments weighed down by negative outlook in the manufacturing sector.

The BES result indicated that only 30 percent out of all companies that were surveyed said they planned to expand their workforce in the first quarter of 2009.

But Sicat said the overall pessimism over the macro-economy mirrored weak global demand as well as expectations that this weak demand would cause a slowdown in domestic demand and production.

Sicat said the predominantly negative sentiments were also attributed to the depreciation of the peso against the US dollar and some fears over the build up of political noise in the country.

Sicat said businesses still expected inflation to go up, as well as interest rates. She said they were also concerned about competition, weak demand and tighter access to credit.

Sicat reported that based on the BES results, businesses outside the National Capital Region were less pessimistic than businesses located in the capital.

On the whole, Sicat said businesses involved in the manufacture and export of food and wood-based furniture showed less pessimism. Exporters that import their raw materials, on the other hand, expected to be hit twice by the slowdown in demand and the depreciation of the peso.

According to Sicat, the BES indicated that businesses planned to expand in 2009 but they would not be hiring new people.

“To us this means that the expansion would come in the form of capital expenditures,” Sicat said. “That’s probably because a lot of these businesses are planning to buy machinery and equipment that would improve their efficiency and allow them to compete better.”

But contrary to the pessimistic view of the business community, the Department of Labor and Employment (DOLE) is more upbeat and reported yesterday over 800,000 jobs available for Filipino jobseekers.

Data from the DOLE’s Bureau of Labor and Employment Statistics (BLES) showed that a total of 813,045 jobs here and abroad have yet to be filled in the first half of the year.

Based on the BLES data, the Calabarzon Region (Cavite, Laguna, Batangas, Rizal and Quezon) posted the highest number of job vacancies with a total of 221,783.

The two other regions with the highest number of unfilled jobs were Central Luzon, 90,153 and Central Visayas, 83,560.

Meanwhile, the DOLE-Bureau of Local Employment (BLE) reported that domestic helpers are now the most in demand workers in the country.

BLE recorded a total 3,050 available jobs for domestic helpers, 460 for call center agents and 350 for professional nurses.      – With Mayen Jaymalin