EXPANSIONARY The Philippine central bank’s latest survey reveals that businesses remains in an expansion mode, with most companies inclined to increase production and hire more employees in the fourth quarter. INQUIRER file photo
Businesses in the country are still on expansion mode and may hire more workers in the months ahead.
According to the Bangko Sentral ng Pilipinas (BSP), most businessmen believe that the economy’s growth prospects will help boost their profitability and are then encouraged to create more jobs.
In its latest survey, the BSP reported that, since the domestic economy is expected to do well in the remaining months of the year, most companies are inclined to increase production and hire more employees in the fourth quarter.
The survey, conducted from July 1 to August 17, revealed that the “employment outlook index” for the fourth quarter stood at +26.6 percent.
A positive figure means that there are more respondents with plans of expansion in the coming months than those without.
The latest index was higher than the +24.7 percent reported in the third quarter, but below the +33.9 percent seen in the second quarter. The index in the first quarter was lower at 25.7 percent.
The BSP reported that expansion plans were noted across all business sectors, led by mining and quarrying, manufacturing, utilities, agriculture and fisheries.
Also, most companies surveyed have announced plans to hire more workers.
The employment outlook index for the fourth quarter stood at +23.2 percent. This is higher than the +14.5 percent seen in the third quarter, +23 percent in the second quarter, and +21.1 percent in the first three months of the year.
The BSP said the favorable results of the survey, which covered 1,619 firms of different sizes from various parts of the country, supported expectations that the economy would continue to post a decent growth rate for the next quarter.
Latest official data showed that the economy, measured in terms of gross domestic product, grew by 4.9 percent in the first quarter from a year ago.
The government expects the economy to grow by an average of 5 to 6 percent this year.
The BSP said that, because of the positive sentiment of businesses in the country, the economy in the second half could grow at a rate faster than previously seen.
“The key takeaway signal here is that [the survey] shows the underlying optimism and resilience of the economy,” BSP Assistant Governor Ma. Cyd Tuaño-Amador said.
Even though parts of Europe are suffering from a debt crisis, while the United States struggles with an anemic economy, the results of the BSP survey on Philippine businesses still came out favorable.
But the survey results, bulk of which was gathered in July, did not take into account the impact of the United States’ credit rating downgrade from Standard & Poor’s.
S&P cut the US rating by a notch, from a perfect score of Triple A to BBB+.
Amador said the downgrade could have a negative effect on business sentiment across the globe.
But in the case of the Philippines, the effect should be minimal because of several positive factors, such as the country’s stable macroeconomic fundamentals.
Officials cited a relatively benign inflation environment, a growing economy, rising reserves of foreign currencies, and an improvement in the government’s fiscal situation.