By Luisa Maria Jacinta C. Jocson, Journalist
Consumers became less pessimistic in the first quarter (Q1) amid expectations of improved income and employment, a survey by the Bangko Sentral ng Pilipinas (BSP) showed.
The BSP Consumer Confidence Index (CI) declined 10.9% in the first quarter, an improvement from the 19% contraction in the previous quarter.
“Consumers’ improved outlook for the first quarter of 2024 is driven by their expectations of additional and higher income, the availability of more jobs and permanent employment, as well as additional family members who are working,” BSP Economic Statistics Department Senior Director Redentor Paolo M. Alegre, Jr. said Friday during a virtual briefing.
The latest data from the local statistics authority showed that the country’s unemployment rate fell in February to its lowest level in two months, at 3.5%.
This amounts to 1.8 million unemployed Filipinos, an improvement from 2.15 million in January and 2.47 million a year ago.
BSP data showed that consumers’ purchasing sentiment for big-ticket items became less pessimistic in the first quarter, with the index improving to -62.6 percent from -71.3 percent. Consumers were also less hesitant to purchase big-ticket items over the next 12 months.
More households also reported an increase in their loans and savings, the BSP said.
The survey showed that 24.9% of households received a loan in the last 12 months, slightly higher than the 22.9% in the fourth quarter. The percentage of households saved also increased, from 29.1% to 33.5%.
LESS OPTIMISM
Meanwhile, Alegre said consumer confidence had become less favorable in the second quarter.
The index remained positive at 2.7% but was lower than the 5.6% in the fourth quarter.
This was due to expectations of “more rapid increases in the prices of goods, fewer available jobs, and lower incomes.”
Headline inflation is expected to temporarily accelerate above the BSP’s 2-4 percent target range over the next two quarters. Inflation accelerated for a second consecutive month to reach 3.7% in March.
The survey showed that consumer sentiment is also less optimistic for the next 12 months. The index was at 13.4%, lower than the 15% in the previous quarter.
BUSINESS OUTLOOK
Meanwhile, the BSP said the business climate was “less optimistic” in the first quarter.
“Companies were optimistic, but their optimism decreased compared to the results of the previous period,” Mr. Alegre said.
The business confidence index fell slightly to 33.1% in the first quarter compared to 35.9% a quarter ago.
The main factors behind the less optimistic outlook were expectations of lower demand after the holidays, lingering inflation risks, fierce competition and the impact of El Niño on agriculture.
At the same time, business confidence was “more dynamic” in the second quarter. The index jumped from 38.2% to 48.1%.
“Companies’ more optimistic outlook for the second quarter of 2024 was attributed to their expectations of higher demand for products and services, the completion of a greater number of projects due to a more conducive, to a seasonal increase in commercial activities in the tourism and fishing sub-sectors during the second quarter of 2024. summer and open fishing seasons, the expansion of activities and the development of new products, as well than reducing inflation,” the BSP said.
Businesses were also more optimistic over the following 12 months, with the overall index rising from 54% to 60.8%.
“Compared to the fourth quarter of 2023, business sentiment in the first quarter of 2024 was less optimistic for the industrial and wholesale and retail sectors, more buoyant for the construction sector and stable for the services sector “, the BSP said.
“The business climate for the second quarter of 2024 was more optimistic in all sectors,” he adds.
Households and businesses expect inflation and interest rates to rise in the first half and over the next 12 months.
Businesses expect inflation to average 5%, while consumers expect inflation to average 5.3%. This figure would be higher than the BSP’s 2-4 percent target and the central bank’s 3.8 percent forecast for the full year 2024.
The BSP said 5,207 households participated in the survey conducted from January 19 to 31, while 1,525 businesses were surveyed from January 5 to 12.