BUSINESS sentiment turned less optimistic in the third quarter and in the next 12 months due to a weak peso and high inflation, the Bangko Sentral ng Pilipinas (BSP) quarterly Business Expectations Survey (BES) showed on Friday.

Conversely, a BSP study on consumer sentiment showed Filipino consumers have a more positive perspective for the last quarter of 2022 and the following 12 months due to expectations of increased income and improved work conditions.

The latest BES results showed an overall confidence index (CI) of 26.1 percent in the third quarter of this year compared to 35.4 percent in the second quarter of 2022.

For the next 12 months, the business sentiment also declined further as the overall CI decreased to 57.7 percent from the previous quarter's survey result of 59.9 percent.

BSP likewise noted a less favorable outlook among exporters, importers and domestic-oriented firms as these types of trading firms registered lower CIs in the third quarter from a quarter ago.

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"For Q4 (fourth quarter) 2022, the outlook was less buoyant for importers and exporters, more optimistic for domestic-oriented firms and steady for dual-activity firms," the BSP added.

Meanwhile, the outlook for the next 12 months was less upbeat for importers, more favorable for exporters and dual-activity firms, but unchanged for domestic-oriented firms.

The CI across all sectors "moderated" in the third quarter this year, indicating that business sentiment of firms in the construction, services, wholesale and retail trade, and the industry sectors were less positive compared to the previous quarter's survey results.

Meanwhile, the outlook for fourth quarter of the respondent firms was less optimistic across sectors, except for those in the services sector whose outlook turned more favorable.

"For the next 12 months, the less upbeat outlook of firms in the industry and services sectors outweighed the more optimistic view of businesses in the construction, and wholesale and retail trade sectors," the BSP said.

Consumer sentiment

For consumer sentiment, the BSP study showed an overall CI of 13.4 percent for the fourth quarter from 11.2 percent previously.

For the next 12 months, the CI stood at 33.4 percent from 32.4 percent.

However, the consumer sentiment in the third quarter was pessimistic compared to the next quarter's outlook.

That means households with pessimistic views increased and outnumbered those with optimistic views. The overall CI in the third quarter declined to -12.9 percent from -5.2 percent in the second quarter.

"The weaker confidence among consumers was largely due to their concerns over the faster increase in the prices of goods and higher household expenses, low income and fewer available jobs and working family members," said the BSP.

The central bank mentioned that consumers expect the unemployment rate to decline, interest rates increasing and the peso depreciating in the third quarter.

Households also anticipate rising prices of consumer goods and services would persist in the next two quarters.

BSP said consumers expressed concerns about increased household expenditure on food, utilities and other commodities, a limited supply of goods and services, and the peso depreciation.

However, the respondents believe inflation will slow down during the ensuing 12 months, BSP said.

The central bank mentioned that effective public policies and initiatives, an adequate supply of goods and services, decreased food spending by households, an appreciation of the peso and positive developments in the Covid-19 scenario are factors that will reduce inflation.