BUSINESS and consumer sentiment both improved in the first quarter, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday, with easing inflation and other positive developments said to have been the primary drivers.
Results of the central bank’s latest Business Expectations Survey (BES) put the first quarter confidence index (CI) — computed as the percentage of companies that answered in the affirmative minus those who replied otherwise — at 35.2 percent, up from 27.2 percent three months earlier.
BSP Department of Economic Statistics Director Redentor Paolo Alegre Jr. told reporters that the latest CI marked a rebound after four consecutive quarterly declines.
“This means that the number of optimists increased and continued to be greater than the number of pessimists during the quarter,” he added.
Respondents attributed their upbeat outlooks to increased business activities during the start of the election campaign period, more orders and consumer purchases with the easing of inflation, higher government infrastructure spending, new and enhanced business strategies and processes, and business expansion and new product lines.
The latest BES, which polled 1,496 companies nationwide, was conducted from January 22-March 19 this year.
The campaign period for the May 13 midterm elections officially started on February 12 for candidates seeking national positions.
Headline inflation, meanwhile, eased to 3.8 percent in February from 4.4 percent a month earlier.
During the survey period, the Budget department also reported that state spending for infrastructure and capital outlays rose 8.2 percent to P75.6 billion last year.
Meanwhile, the overall consumer confidence index for the first quarter also improved to -0.5 percent from the -22.5 percent recorded three months earlier.
Alegre said the latest CI was the “all-time largest quarter-on-quarter increase since the start of the nationwide survey in the first quarter of 2007.”
Respondents attributed their improved outlooks to expectations of additional or high incomes, peace and order improvements, the availability of more jobs, and good governance.
The latest Consumer Expectations Survey, which measures sentiment about the country’s economic condition, family financial situation and family income, was conducted from February 5 to 16.
It covered 5,562 households nationwide.
Business and consumer outlooks for the next three months also improved, the central bank said.
Firms turned more bullish for the second quarter with the index at 52 percent, up from 29.4 percent three months earlier and the highest next quarter reading since the last three months of 2016.
“Business optimism was heightened on the back of broadly the same factors that were behind the buoyant sentiment for first quarter of 2019,” Alegre said.
Respondents cited expectations of increased demand during summer due to tourism, election-related spending in the run-up to the May 2019 elections, a sustained increase in orders and projects leading to higher production volumes, and ramped-up public and private construction activities during the dry season.
The improvement in consumer sentiment, meanwhile, was also carried over to the next three months with the Cl reverting to positive territory at 10.7 percent from -0.8 percent in the previous quarter.
The index for the next 12 months climbed to 28.4 percent from 10.7 percent a quarter ago.
“Similar to the current quarter, the consumer outlook was more upbeat for the next quarter and the year ahead due to expectations of additional/high income and availability of more jobs,” Alegre said.