Filipino consumers and businessmen turned more upbeat in the first quarter of the year, expecting the next three months to be even better for them due to improving income and more jobs for the former and the likely improvement in sales for the latter due to election spending.
Thus revealed the results of separate consumer and business confidence surveys released simultaneously on Thursday by the Bangko Sentral ng Pilipinas. The surveys showed a broad improvement in economic sentiment after last year’s high inflation-induced pessimism.
“Consumer outlook improved for the first quarter of 2019, as the overall confidence index rose to -0.5 percent from -22.5 percent in the fourth quarter of 2018,” the BSP said in a statement, pointing out that this represented the largest quarter-on-quarter increase since the start of the nationwide survey in 2007.
“The higher, albeit negative, confidence indicates that the number of households with optimistic views considerably increased, but was still lower than those who think otherwise,” the BSP said.
The confidence index is computed as the percentage of households that answered in the affirmative less the percentage of households that answered in the negative with respect to their views on a given indicator. The overall consumer confidence index measures the average direction of change in three indicators: overall condition of the economy, household finances and household income.
According to respondents, their improved outlook during the current quarter was mainly brought about by their expectations of additional or higher income; improvement in peace and order; availability of more jobs and good governance.
“Improvement in the consumer sentiment was carried to the subsequent reference periods as the next three months’ confidence index reverted to positive territory at 10.7 percent from -0.8 percent in the previous quarter, and the year ahead index rose to 28.4 percent from 10.7 percent in the fourth quarter of 2018,” the BSP said.
Meanwhile, business outlook on the economy improved for the first quarter of 2019, with the overall confidence index rising to 35.2 percent from 27.2 percent for the fourth quarter of 2018, the central bank said. This marks a significant reversal after the metric declining for four consecutive quarters last year.
“According to respondents, their more upbeat outlook was due primarily to expectations of more business activities during the start of the campaign period for the forthcoming midterm elections; increased orders and consumer purchases with the easing of inflation; higher government infrastructure spending; the introduction of new and enhanced business strategies and processes; and the expansion of their businesses and new product lines,” the central bank said.
They were also optimistic that their business operations would benefit from the favorable macroeconomic conditions in the country, particularly lower inflation and interest rates.