Business sentiment Q1 index eases to 41.9%


BSP survey shows post-holiday, pre-election gloom

Business sentiment for the first three months of the year has fallen, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, with factors such as the end to the holidays and global volatility pulling down a quarterly index.

The overall business confidence index (CI) fell to 41.9 percent for the January-March period from 51.3 percent in the fourth quarter of last year, results of the central bank’s First Quarter 2016 Business Expectations Survey (BES) showed.

The latest BES, which polled 1,539 firms nationwide, was conducted from January 5 to February 17. Results of the survey are viewed as an indicator of the direction of overall business activity.

The CI is computed as the percentage of firms that answered in the affirmative less the percentage of those that replied in the negative with respect to a given indicator.

Respondents cited the following factors for their Q1 outlook:

• an expected slowdown in business activity and moderation of consumer demand after the holiday season;

• the decline in prices of oil and other commodities;

• growing concerns about the outlook for global growth amid continued weakness in China;

• the wait-and-see attitude of businesses with regard to the outcome of 2016 national and local elections;

• adverse effects of the El Niño weather pattern on crop production and businesses;

• strong market competition; and

• the bear ish trend of the Philippine stock market.

Rosabel Guerrero, director of the central bank’s Department of Economic Statistics, said local sentiment mirrored less sanguine business outlooks in the United States, Canada, France, the Netherlands nd Russia. Sentiment was even more pessimistic in Hong Kong and Singapore, she noted.

The outlook for the next three months, on the other hand, rose from the previous survey. With the CI at 49.6 percent from 43.9 percent, the central bank said it “suggests that economic growth could be higher for the next quarter.”

Respondents said the reasons for their more bullish outlook were:

• election-related spending in the run-up to the May elections;

• a sustained increase in orders and projects leading to higher production volumes;

• an anticipated increase in demand during the summer and enrollment periods;

• introduction of new and enhanced business strategies and processes; and

• the expansion of businesses and introduction of new product lines.

Sentiment among importers and domestic-oriented firms for the first quarter was mixed, the central bank said.

“The outlook of importers and domestic-oriented firms was less sanguine, while exporters and dual-activity firms’ outlook was more positive,” Guerrero said.

The outlook of firms across trade groups, meanwhile, improved for Q2 2016.

Sentiment was also mixed across sectors for the current quarter, the central bank said, with the outlooks less favorable in the services and wholesale and retail trade sectors. Construction remained steady, while that of industry was more buoyant.

For Q2 2016, optimism was higher in the industry, wholesale and retail trade, and services sectors, but lower in construction.


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