CONSUMER confidence became less negative while business sentiment was steady in the third quarter, the Bangko Sentral ng Pilipinas reported on Friday.
Businesses were more confident with regard to the last three months of 2024 and the next 12 months, while consumers turned optimistic for October-December but were less confident for the year ahead.
The overall consumer confidence index (CI) for the current quarter improved to -15.6 percent, from -20.5 percent three months earlier, while that for businesses was little changed at 32.9 percent from 32.1 percent previously.
A positive result means that optimists outnumber pessimists. The reverse applies with regard to negative CIs.
The less pessimistic consumer confidence for the third quarter was said to have stemmed from expectations of higher income from wages, remittances and other sources; increased opportunities for additional income; permanent employment; more job availability; and the more working family members.
Business sentiment, meanwhile, was boosted by expectations of rising demand for goods and services, including food and beverages, apparel, education and personal services; lower inflation; a seasonal business uptick due to the start of the new school term, pre-holiday inventory stocking by retailers and business operation expansion/improvements.
Quarter and year ahead
The CI for consumers for the next three months turned positive at 0.7 percent from -0.4 percent. It was also positive for the year ahead but declined to 9.9 percent from 13.5 percent.
For the fourth quarter, consumers said that they expected higher incomes, new sources of income, more job availability, salary increases and additional working family members.
The outlook for the next 12 months stemmed from concerns about rising prices, fewer job opportunities, lower incomes and the widespread perception of government corruption.
For businesses, the CI for the fourth quarter and next year improved to 56.8 percent and 58 percent from 43.7 percent and 56.5 percent, respectively.
This was attributed to expectations of higher demand for products and services during the holiday season, lower interest rates, easing inflation and improving economic conditions.
Component indicators
With regard to the country’s economic condition, and family financial situation and family income, consumers were less pessimistic in the third quarter: -30.7 percent from -38.8 percent, -11.12 percent from -17.1 percent and -4.7 percent from -5.6 percent, respectively.
Results for the fourth quarter (Q4) also improved with regard to the three component indicators: -5.8 percent from -7.7 percent for the country’s economic condition, 1.8 percent from 1.4 percent for family financial situation and 6.1 percent from 5.2 percent for family income.
Consumers were more worried for the next 12 months with the outlook dipping for the economic outlook (2.9 percent from 3.7 percent), family financial situation (11.6 percent from 15.7 percent and family income (15.3 percent from 20.9 percent).
Industry outlooks
As for the business sector, third-quarter sentiment was more upbeat in the construction (37. 6 percent from 35.2 percent) and services (36.7 percent from 29.1 percent) sectors, but declined for wholesale and retail (32.3 percent from 37.2 percent), and industry (26.0 percent from 30.3 percent).
“For Q4 2024, the business outlook was upbeat across all types of trading groups,” the central bank said.
“For the next 12 months, the business confidence was more buoyant for dual activity and domestic-oriented firms but less optimistic for importers and exporters,” it added.
Firms expect tight cash flow and liquidity in the third quarter with the financial condition index largely unchanged. Additionally, businesses expect limited access to credit as the index for credit access was negative.
Businesses saw the peso falling against the dollar in the third quarter but strengthened in the next three months and the year ahead. Peso borrowing rates were seen rising in the last three months of 2024 and beyond.
Inflation was projected to rise in the second half of 2024 and the next 12 months, but fewer firms expected higher inflation compared to the previous survey.
Firms forecast an average inflation rate of 4.3 percent in the third quarter of 2024 and 4.4 percent in the fourth quarter and the following year, above the government’s target range of 2.0 to 4.0 percent.
Consumer findings
For consumers, sentiment regarding purchases of big-ticket items became more pessimistic as the CI slipped to -68.9 percent in the third quarter from -64.5 percent previously.
The percentage of households with savings dropped to 29 percent from 31.4 percent, while the percentage of households with loans increased to 25.5 percent from 24.6 percent.
They anticipate that interest rates will rise and the peso depreciate in the last two quarters of 2024 and the next 12 months.
Households also expect unemployment to rise across all periods.
Additionally, more respondents projected faster inflation for the rest of 2024, and consumers predicted an average of 5.9 percent for next year, exceeding the target range.
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