Pessimism stalked Filipino consumers in 3rd quarter

More Filipino consumers turned pessimistic in the third quarter than last year as domestic households, particularly those relying on remittances, felt the weight of unfavorable economic developments abroad.

Sentiment also declined as the euphoria over the entry of the new administration last year gradually diminished while economic challenges started to kick in, the Bangko Sentral ng Pilipinas said.

According to the results of the third-quarter Consumer Expectation Survey (CES), the confidence index of Filipino consumers reached -18.7 percent, deteriorating from the -14 percent registered in the same period last year.

The latest CES was conducted from July 1 to 14.

It covered 5,658 households nationwide, with a response rate of 97.4 percent.

A negative index means respondents who say they are pessimistic about their income and growth prospects of the economy outnumber those who believe otherwise.

Teresita Deveza, acting deputy director for the department of economic statistics of the BSP, said in a conference Thursday that the consumer confidence index in the third quarter, compared with that of a year ago, began to decline when the euphoria of Filipino consumers over the 2010 elections wore off.

“Last year was an election year, and people had very high expectations from the new government. Then, the index went down; it was actually lower in the first two quarters of this year. But for the third quarter, it improved,” Deveza said.

Some of the factors that are believed to have dampened sentiment of consumers include the unrest in the Middle East and North Africa, the weak economic performances of the United States and Europe, and threats of accelerated rise in the prices of consumer goods and services.

Nonetheless, the consumer confidence index in the third quarter of this year was an improvement from the -24.1 percent registered in the second quarter of this year.

Officials said sentiment on a quarter-on-quarter basis improved partly because of the better employment and, thus, income situation.

The unemployment rate stood at 7.2 percent in the second quarter, higher than the 7.1 percent reported in the third quarter.

From April to June, the economy, measured in terms of gross domestic product, posted a growth of only 3.4 percent.

This marked a slowdown from the 4.6 percent registered in the first quarter, and the over 8 percent recorded in the second quarter of 2010.

In addition to problems of the global economy, which had slowed down growth in the country’s export income, lackluster government spending was also blamed for the deceleration of growth in the second quarter.

Consumer confidence index has always been negative since the CES was first conducted in the first quarter of 2007.

According to central bank officials, most consumers tend to feel insecure about their finances even in times when the economy is supposed to be improving.

For this reason, monetary officials said, a less negative consumer confidence index may be considered a welcome development.

The BSP also conducts a quarterly survey on sentiment of enterprises.

Unlike consumers, businesses hold a more favorable sentiment on their income and the country’s economy.

According to the results of the third-quarter Business Expectation Survey of the central bank, the business confidence index stood at +34.1 percent.

This was an improvement from the +31.8 percent registered in the second quarter, but lower than the +45 percent recorded in the third quarter of last year.—Michelle V. Remo