Business, consumer sentiment dive in Q4
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Thu, 06 Dec 2018 16:25:15 +0000
BUSINESS and consumer sentiment both dove in the fourth quarter, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday, with high prices said to have been a major dampener.
“The fourth quarter 2018 outlook of businesses and consumers both weakened as firms and households became more conscious due to relatively high commodity prices,” BSP Department of Economic Statistics director Redentor Paolo Alegre Jr. said in a briefing.
Results of the central bank’s latest Business Expectations Survey (BES) put the fourth quarter confidence index (CI) — computed as the percentage of companies that answered in the affirmative minus those who replied otherwise — at 27.2 percent, down from 30.1 percent three months earlier.
Alegre said business sentiment was “less optimistic” with the latest CI the lowest in over eight years or since the first quarter of 2010.
He explained that respondents attributed the lower confidence to higher inflation, said to have been driven by rising raw material costs and global oil prices, a weakening peso, higher interest rates, lower sales and orders, and a lack of raw material supplies.
The latest BES, which polled 1,463 companies nationwide, was conducted from October 1-November 23.
Inflation remained at a nine-year high of 6.7 percent in October while the Philippine peso hit the P54:$1 level the same month.
In November, the Bangko Sentral implemented a 25-basis point (bp) policy rate hike, bringing the total so far for the year to 175 bps.
Meanwhile, the overall consumer confidence index for the fourth quarter dropped to -22.5 percent from the -7.1 percent recorded three months earlier. It was also a reversal from the 9.5 percent posted in the comparable 2017 period.
“Consumers’ outlook continued to weaken … In particular, the current quarter Cl registered the lowest reading … [since] Q4 2014 and posted the largest drop by 15.4 percentage points since the nationwide survey started in Q1 2007,” Alegre said.
Respondents attributed the bearish outlook to higher prices of commodities, low salaries/incomes, increased household expenses, no pay hikes and an upsurge in the number of unemployed persons.
They also highlighted the occurrence of typhoons and other calamities as reasons behind the weaker sentiment.
The latest Consumer Expectations Survey, which measures sentiment about the country’s economic condition, family financial situation and family income, was conducted from October 1 to 13. It covered 5,609 households nationwide.
Business and consumer outlooks for the next three months also remain weak, the central bank said.
Firms expect less bullish business conditions to continue for the first quarter of 2019, with the index positive but lower at 29.4 percent front 42.6 percent in the previous quarter — the lowest next quarter reading since the third quarter of 2009.
“Respondents attributed their weaker outlook for first-quarter 2019 to the usual slowdown in consumer demand after the holiday season. Moreover, sentiment of firms was tempered by expectations of a peso depreciation, which increases the costs of imports, as well as higher inflation and interest rates,” Alegre said.
Less favourable consumer sentiment, meanwhile, was also carried over to the next three months with the Cl reverting to negative territory at -0.8 percent from 3.8 percent in the previous quarter. The index for the next 12 months, while positive, declined to 10.7 percent from 13 percent a quarter ago.
Alegre said that similar to the current quarter, the less buoyant outlook for the next three months and the year ahead was due to expectations of higher prices of goods, low salaries, increased expenditures, no pay hikes and high unemployment.
Central bank Deputy Governor Diwa Guinigundo said “I think in both cases, respondents did not have the benefit of knowing the decline in inflation for November and I don’t think they would also have the benefit of knowing that Congress has approved the rice tariffication bill that would reduce inflation by .85 percentage point and the fact that oil prices — both global and domestic —have started to decline.”
“Looking at the actual developments, this may no longer be the case at this point when more positive developments have take place. The peso has appreciated, inflation has gone down,” he added.
The peso has been showing signs of a recovery in the past weeks, trading within the P52:$1 level. The unit, however, weakened by 2 centavos against the US dollar to P52.76:$1 on Thursday.
Headline inflation slowed to a four-month low of 6.0 percent in November.
The post Business, consumer sentiment dive in Q4 appeared first on The Manila Times Online.