Confidence level of consumers up in Q3

MANILA, Philippines - The confidence level of Filipino consumers for the third quarter improved after declining for two straight quarters on the back of improved sentiments, results of a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

BSP’s Department of Economic Statistics (DES) acting deputy director Teresita Deveza said in a press conference that the confidence level of Filipino consumers improved to -18.7 percent in the current quarter after declining to -23.1 percent in the first quarter and -24.1 percent in the second quarter from -8.4 percent in the fourth quarter, of last year.

“This is the first quarter-on-quarter gain in sentiment since the fourth quarter of 2010. The higher (but still negative) consumer index in the third quarter means that the number of households with an optimistic outlook increased but they continued to be outnumbered by those who think otherwise,” Deveza stressed.

She pointed out that respondents of the 3rd Quarter 2011 Consumer Expectation Survey (CES) attributed their improved sentiments to expectations of more jobs, higher family income, good business, and the implementation of government policies such as the Pantawid Pamilyang Pilipino Program of the Aquino administration.

She said consumers believed that the growth in the domestic labor market as well as the growth in local industries and higher fiscal spending would boost domestic demand in the third quarter of the year.

For the current quarter, the sentiments of Filipino consumers on economic conditions improved to -26.4 percent from -41.9 percent in the second quarter while that on family financial situation was steady at 22.4 percent and that of family income likewise improved to -7.4 percent from -7.9 percent.

“For the third quarter of 2011, the more favorable outlook of consumers on the country’s economy pulled up overall consumer confidence,” Deveza added.

According to her, the improved outlook on the economic condition of the country was traced to brighter job prospects, good governance, and stable prices.

The National Statistical Coordination Board (NSCB) reported last month that the growth of the country’s domestic output eased to 3.4 percent in the second quarter of the year from 8.9 percent in the same quarter last year due to the surge in world oil prices, the prolonged weakness of the global economy, the political unrests in the Middle East and North African (MENA) region, and the disasters in Japan.

The GDP growth in the second quarter was also slower than the revised 4.6 percent booked in the first quarter of the year. This brought to 4.0 percent the GDP growth in the first half of the year from 8.7 percent in the first semester last year.

The National Economic and Development Authority (NEDA) expected the country’s GDP to grow between 4.5 percent and 5.5 percent in the second quarter while the BSP projected the GDP in the second quarter to grow faster than the 4.9 percent expansion booked in the first quarter of the year.

Deveza said the consumer confidence index for the next three months improved to 1.5 percent from -7.8 percent in the second quarter while the confidence level for the next 12 months soared to 11.7 percent from 4.4 percent due to expectations of additional income, increasing employment opportunities, salary increases as well as stable prices of goods and services.

“Looking ahead, consumer expectations for the quarter ahead and the year ahead turned bullish as the number of households with a positive outlook increased and exceeded those with negative views,” she said.

The improved consumer confidence in the Philippines reflected that of the US, France, New Zealand, Thailand, and Japan.

However, she revealed that the results of the survey that covered 5,658 households from July 1 to July 14 did not factor in the possible impact of the decision of Standard & Poor’s to downgrade the triple A credit rating of the US as well as the sovereign debt crisis in Europe.

She explained that the country’s economic growth would pick up in the second half of the year based on the improved results of the survey for the third quarter of the year.

“It (economic growth) is expected to be better than the first half of the year,” Deveza added.

Furthermore, she said more Filipino consumers expect a more favorable employment situation in the next 12 months as fewer respondents expected an increase in the unemployment rate compared to the previous quarter’s survey.

Likewise, Filipino consumers see inflation rate declining over the next 12 months on the back of more stable prices as shown in the decline in consumer prices to 4.3 percent in August from 4.6 percent in July. The BSP sees inflation averaging between three percent and five percent from 2011 to 2014.