Q4 business confidence highest in 2 years

Businesses are more eager to expand their businesses and hire more people in the current quarter, expecting brisk sales due to the holiday season and higher government spending.

Results of the Bangko Sentral ng Pilipinas’ Business Expectations Survey (BES) showed that confidence among corporations rose to its best level in two years.

“This confidence index—the highest in two years—indicate that more businesses are optimistic about the country’s economic prospects for the last quarter of the year,” the bank said in a statement.

The BES confidence index rose to 51.3 percent for the fourth quarter of the year from 41.4 percent in the previous three months. The confidence index is computed as the percentage of firms that answered in the affirmative less the percentage of firms that answered in the negative.

Stronger sales during the holiday season, the steady flow of remittances from migrant workers and election-related spending were cited as the main reasons for the improved outlook.

Respondents also cited the expectation of better sales due to the Asia Pacific Economic Cooperation (Apec) leaders meeting held in Manila in the middle of last month.

The improvement in business confidence during the quarter bodes well for the domestic economy’s performance. BSP officials have said the relationship between the BES index and gross domestic product (GDP) growth was “statistically significant.”

Business sentiment in  Australia, Japan and the Euro Area was also up in the same quarter, similar surveys showed. Businesses in US, UK, China, Hong Kong, Germany, Russia, Indonesia, Singapore and India were more glum.

For the next quarter, business outlook turned less optimistic, with the index at 43.9 percent from 53.1 percent in the last quarter’s survey. The next quarter confidence index suggests that the optimists continued to outnumber the pessimists but the number of respondents with favorable views declined relative to the previous quarter’s survey results.

Respondents attributed their less sanguine outlook for the first quarter of 2016 to the typical slowdown in demand after the holiday season. “Other reasons cited were stiffer competition, concerns over the adverse effects of El Niño and uncertainties in the global economy,” the BSP said.  Paolo G. Montecillo