Consumer sentiment firmer in Q2, but still in negative territory

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Consumer sentiment about the Philippine economy rose slightly in the second quarter of the year as a result of an improving employment and investment environment, but consumers were less upbeat about the next quarter and the year ahead with the onset of the rainy season, the central bank’s latest Consumer Expectations Survey (CES) shows.

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In a press briefing on Friday, the Bangko Sentral ng Pilipinas (BSP) announced that the overall confidence index (CI) in the second quarter of 2014 edged upward to minus 17.3 percent from minus 18.8 percent in the first quarter of the year.

Year-on-year, data showed that the CI during the quarter was significantly lower than the minus 5.7 percent CI in the comparative quarter of 2013.

“The higher but still negative CI in the second quarter means that the number of the households with an optimistic outlook increased but they continued to be outnumbered by those who think otherwise,” said Rosabel Guerrero, director for the BSP’s Department of Economic Statistics.

According to the survey, respondents noted the availability of jobs as well as the increase in the number of employed family members, increasing family income because of higher salary, stronger business activity, and better harvests as the reasons for their improved sentiment.

Stepped-up road infrastructure projects, more investments prospects, and the improvement in the peace and order situation in the country also contributed to positive sentiments.

For the next quarter and the year ahead, however, the survey showed that consumer sentiment moderated because of the expected negative impacts of the anticipated rainy season to the Philippine economy.

For the third quarter, the CI declined to a neutral value of 0 percent from the positive 5.4 percent CI recorded in the first quarter of 2014.
For the year ahead, the CI slowed down to 15.9 percent from the 19.3 percent recorded in the first quarter of the year.

Consumers said that their less sanguine outlook stemmed from expectations of lower income because of poor harvest and slower business activities during the rainy season which could cause work interruptions.

They also cited as reasons for their less favorable outlook expectations of higher household expenses such as education and maintenance medicines, and fewer job opportunities.

Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands considered the results of the latest CES as an indication that the Philippine economy will continue to expand despite the slower than expected 5.7 percent first quarter growth.

“The general improvement in the consumer sentiment shows that growth is still expected to be robust, helping provide jobs to the work force,” he said in an e-mail to The Manila Times.

The economist noted that the infrastructure projects by the government, the signing of the Bangsomoro peace pact and the investment rating upgrades that the country received in the past months appear to be fresh on people’s minds.

“This bodes well going forward but the recent weaker than expected growth print and episodes of slightly higher inflation path may have consumers a little less certain of the time horizon further down the line,” he stated.

The CES is a quarterly survey of households drawn from the Philippine Statistics Authority-National Statistics Office’s Master Sample List of Households, which is considered a representative sample of households nationwide.

The survey was conducted from April 1 to 12, 2014 and surveyed 6,027 households nationwide.

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