• Consumer outlook up but still negative – BSP

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    tableConfidence index for Q4 improves to -8.1% from -11.6%

    Optimism among Filipino households has improved, but overall confidence remains negative for the current quarter the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

    The central bank’s latest Consumer Expectations Survey (CES) showed an improvement in the confidence index (CI)—computed as the percentage of those that answered in the affirmative less the percentage of those that answered otherwise—to -8.1 percent from -11.6 percent in the third quarter and the -21.8 percent recorded a year earlier.

    The fourth quarter result is also the highest since the -7.9 percent seen in the third quarter of 2013.

    The overall consumer CI measures the average direction of change in three indicators—overall condition of the economy, household finances and household income. A positive CI indicates a favorable view with regard to a given indicator, except for inflation, interest rates, unemployment and change in prices, where a positive CI indicates the opposite.

    “The higher but still negative CI for the fourth quarter of 2015 means that the number of households with an optimistic view increased but was less than those w ho think otherwise,” Rosabel Guerrero, director for the central bank’s Department of Economic Statistics, told reporters.

    The nationwide survey—conducted from October 1 to 12— covered 6,020 households, 2,904 of which were from the National Capital Region (NCR) and 3,116  from areas outside the NCR.

    Increased optimism in the fourth quarter was said to have been spurred by expectations of:

    • more jobs and an increase in the number of working family members;
    • additional incomes/higher salaries given the receipt of Christmas bonuses and 13th month pay;
    • stable commodity prices;
    • effective government policies;
    • infrastructure improvements; and
    • brisker business activity leading to higher household income.

    Positive looking ahead

    Looking ahead, overall consumer confidence was positive, with the index posting a slight dip to 5.7 percent for the first quarter of 2016 from 5.8 percent in the previous survey. For the next 12 months, the CI improved to 18 percent from 15.8 percent three months earlier.

    “Consumers anticipated lower unemployment, improvements in the country’s economy and the election of new government officials for the year ahead,” the central bank said in a statement.

    Based on the three components by which consumer sentiment is measured, the latest survey found that for the fourth quarter, confidence in the economy increased while the outlooks on family finances and income were broadly steady.

    While negative, the outlooks on family income and finances, at -0.5 percent and –9.9 percent, respectively, were the highest and second-highest since the first quarter of 2007, the central bank said.

    “For the next quarter and the year ahead, consumer outlook on the country’s economic condition was more sanguine while their outlook on family financial situation and income declined (but remained positive) compared to their expectations in the previous quarter’s survey,” the central bank said.

    Consumer confidence for the current quarter improved across income groups , which was attributed to a more favorable outlook on the country’s economic condition that offset mixed views on family income and finances.

    The high-income group— households earning P30,000 and up monthly—registered the highest CI of 22 percent. Those in the middle-income group—P10,000 to P29,000/month—recorded an 0.8 percent CI, while the low-income segment—less than P10,000/month—posted a negative CI of -18.6 percent.

    “For the next quarter and the year ahead, the middle- and high-income groups generally reported higher consumer confidence while that of the low-income group declined in view of their less favorable expectations on their family income and financial situation,” the central bank said.

    Spending seen rising

    Survey results also showed that more households than those that said otherwise expected expenditures on basic goods and services to go up in the first quarter of next year. The number that said so, however, declined from last year with the latest CI at 34.2 perdent from 37.3 percent.

    “The spending outlook index declined across commodity groups, except for house rent and furnishing, and medical care. The biggest decreases were observed for clothing and footwear, electricity, restaurants and cafes, and food, non-alcoholic and alcoholic beverages,” the central bank said.

    The percentage of households that considered the current quarter as a favorable time to buy big-ticket items rose to 30.2 percent from 27.4 percent. The outlook on buying real estate was the most optimistic, followed by consumer durables.

    Savings behavior

    For the current quarter, the percentage of households with savings rose to 30.2 percent from 28.9 percent. The middle-income group saw increases while savings among  the low- and high-income groups remained broadly steady.

    Respondent said they were saving for emergencies, education, health and hospitalization, retirement, and business capital and investment.

    About two-thirds had bank accounts while 40.1 percent kept their savings at home and 32.7 percent put their money in cooperatives, paluwagan, other credit/loan associations, the Social Security System, the Pag-IBIG Fund and as investments in stocks and insurance.

    “[T]he percentage of respondents who reported that they could set aside money for savings during the current quarter increased to 41.5 percent (from 36.2 percent for Q3 2015).

    Likewise, the proportion of those that could set aside 10 percent or more of their monthly gross family income was higher at 35.6 percent (from 30.3 percent for Q3 2015),” the central bank said.

    Focusing on households that receive remittances from overseas Filipino workers (OFWs), the central bank said 95.9 percent used the money for food and other household needs. The proportion of OFW households that said so as well as those that allotted part of the remittances for the purchase of a house (11.9 percent) and for investments (6.6 percent) remained steady.

    Expectations  on select indicators

    The survey also found respondents expecting inflation to stay steady at 4.2 percent, which the central bank said indicated that inflationary expectations were likely to “remain well-anchored” over the next year.

    More, meanwhile, expect interest rates and respondents were also of the view that the peso would fall against the dollar over the next 12 months. Unemployment is also expected to increase next year.

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