Filipino consumers were less pessimistic in the first quarter of the BSP survey

By means of Luisa Maria Jacinta C. Jocson, News reporter

Consumers became less pessimistic in the first quarter (Q1) due to expectations of improvements in income and employment, a survey by the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP consumer confidence index (CI) fell 10.9% in the first quarter, an improvement from the 19% contraction in the previous quarter.

“Consumers’ improved outlook for the first quarter of 2024 is driven by their expectations of additional and higher income, the availability of more jobs and permanent jobs, and additional working family members,” BSP Department of Economic Statistics Senior Director Redentor Paolo M. Alegre , Jr. said in a virtual briefing on Friday.

The latest data from the local statistical authority shows that the country’s unemployment rate fell to a two-month low of 3.5% in February.

This equated to 1.8 million unemployed Filipinos, an improvement from 2.15 million in January and 2.47 million a year ago.

BSP data showed that consumer purchasing sentiment for expensive items became less pessimistic in the first quarter as the index improved from -71.3% to -62.6%. Consumers were also less hesitant to purchase expensive items in the next twelve months.

More households also reported increases in loans and savings, the BSP said.

The research shows that 24.9% of households have used a loan in the past twelve months, slightly more than the 22.9% in the fourth quarter. The percentage of households with savings also increased from 29.1% to 33.5%.

LESS OPTIMISM

Meanwhile, Mr. Alegre said consumer sentiment for the second quarter has become less favorable.

The index remained positive at 2.7%, but was down from 5.6% in the fourth quarter.

This was due to expectations of a “faster rise in commodity prices, fewer available jobs and lower income.”

Headline inflation is expected to temporarily accelerate above the BSP’s target range of 2-4% over the next two quarters. Inflation accelerated for the second month in a row to 3.7% in March.

The survey showed that consumer confidence is also less optimistic in the coming twelve months. The index stood at 13.4%, down from 15% in the previous quarter.

BUSINESS OUTLOOK

Meanwhile, the BSP said business confidence was “less bullish” in the first quarter.

“Companies were optimistic, but their optimism declined compared to the previous period’s results,” Mr. Alegre said.

The business confidence index fell slightly to 33.1% in the first quarter, compared to 35.9% a quarter ago.

The main drivers for the less optimistic outlook were expectations of a drop in demand after the holidays, persistent inflation risks, fierce competition and the impact of El Niño on agriculture.

Meanwhile, business confidence was “more vibrant” in the second quarter. The index rose from 38.2% to 48.1%.

“Companies’ more optimistic outlook for the second quarter of 2024 was attributed to their expectations of increased demand for products and services, the completion of more projects thanks to a more favorable business environment, a seasonal rebound in business activity in the tourism and fishing subsectors during the summer and open fishing seasons, business expansions and new product development, and declining inflation,” the BSP said.

Companies were also more optimistic over the next twelve months, as the overall index rose from 54% to 60.8%.

“Compared to the fourth quarter of 2023, business sentiment in the first quarter of 2024 was less optimistic for the industrial and wholesale and retail sectors, more buoyant for the construction sector and more stable for the services sector,” the BSP said.

“Business sentiment for the second quarter of 2024 was more optimistic across all sectors,” it added.

Both households and businesses expect higher inflation and interest rates in the first half of the year and the next twelve months.

Companies expect inflation to average 5%, while consumers expect inflation to average 5.3%. This would be above the BSP’s 2-4% target and higher than the central bank’s 3.8% annual forecast for 2024.

The BSP said 5,207 households participated in the survey conducted from January 19 to 31, while 1,525 businesses were surveyed from January 5 to 12.