Domestic consumption seen to remain strong in Q4

MANILA, Philippines - Domestic consumption, which primarily drives the country’s economic growth, is expected to remain robust in the last quarter of the year, the Bangko Sentral ng Pilipinas said.

“Output expansion is expected to be sustained over the coming quarters with higher-frequency indicators of demand, including vehicle sales, energy sales, and manufacturing output, still growing robustly,” the BSP said.

The central bank said the Purchasing Managers’ Indices of manufacturing and service sectors continued to indicate expansion.

However, the BSP noted the index for the retail and wholesale sector was below the 50-threshold. “The respondents cited decrease in orders and unstable prices and decrease in the production of suppliers as the main reasons for the decline. Nevertheless, purchases of the retail/wholesale sector was in expansion mode in preparation for the Christmas season,” the report said.

A PMI reading of 50 and higher points to a growing industry.

At the same time, the BSP said its consumer and business confidence surveys both show bullishness in the fourth quarter.

“Measures of consumer and business sentiment, while declining slightly for the third quarter, turned bullish for the next quarter,” the central bank said.

“These demand indicators are consistent with the results of the latest business cycle analysis of the BSP and various leading economic indicators monitored by the BSP and NSCB (National Statistical Coordination Board) which all point to a continued economic upturn.”

The central bank noted seven out of its 11 indicators, and eight out of NSCB’s 11 indicators all point to continued economic growth in the third quarter.

The Philippine economy grew by 7.6 percent in the first half, faster than the government’s full-year target of six to seven percent.