Prior to quarantine, firms plan to expand, hire more

MANILA, Philippines — More companies were planning to expand their operations and hire more workers before the economy came to a grinding  halt due to the coronavirus disease 2019  or COVID-19 outbreak, according to the Bangko Sentral ng Pilipinas (BSP).

According to  the BSP’s first quarter Business Expectations Survey (BES),   the percentage of businesses with expansion plans in the industry sector for  the second quarter   increased to 30.2 percent from 29.2 percent in the previous quarter.

However, the survey, which covered 1,533 firms nationwide, was conducted between Jan. 14 and March 13 prior to the Luzon-wide enhanced community quarantine.

“Expansion plans are higher for the second quarter of  2020,” the BSP said.

According to the BSP, the survey also showed that businesses had  stronger expansion plans for the next quarter across the industry sub-sectors, except for the utilities sub-sector whose expansion plans were weaker.

However, expansion plans for the next 12 months was lower as only 37.2 percent of the total respondents expressed plans to expand their businesses from the previous quarter’s 38.1 percent.

The BSP said weaker expansion plans were recorded for the manufacturing and agriculture, fishery, and forestry sub-sectors for the next 12 months.

According to the survey, the average capacity utilization in the industry and construction sectors for the first quarter was lower at 74.9 percent from 75.1 percent in the previous quarter.

The BSP said the employment outlook index inched up slightly to 16.9 percent from 16.6 percent, suggesting that more firms indicated to continue hiring new employees for the second quarter.

“Further, increased hiring intentions in the industry and construction sectors counterbalanced the moderation of employment prospects in the wholesale and retail trade and services sectors,” it said.

However, the employment outlook index for the next 12 months declined to 30.8 percent from 34.5 percent.

“The decline in the employment outlook index for the next 12 months stemmed from the slowdown of hiring employees in the wholesale and retail trade and services sectors,” the BSP said.

Businesses have ground to a halt especially now that the enhanced community quarantine has been extended by two more weeks or until April 30

Based on the survey, business outlook was more favorable as the next quarter confidence index rose to 42.3 percent from 40.3 percent after plunging to a decade-low of 22.3 percent from 40.2 percent for the first quarter of the year.

The respondents’ more buoyant outlook for the second quarter could be attributed to the increase in orders or sales primarily in the community, finance, business, and trade sub-sectors, the usual uptick in demand during summer, enrollment, and harvest seasons as well as higher government infrastructure spending.