Firms seen expanding, hiring more

MANILA, Philippines — Businesses are ramping up expansion and hiring more workers as the economy continues to reopen after stalling last year due to strict mobility restrictions brought about by the COVID outbreak, according to the Bangko Sentral ng Pilipinas.

BSP senior director Redentor Paolo Alegre said the results of the fourth quarter 2021 Business Expectations Survey (BES) showed the employment outlook index climbed to 24.5 percent for the first quarter of next year compared to the previous quarter’s 6.2 percent.

“For the first quarter of  2022, the employment outlook is more optimistic and more firms plan to expand operations,” Alegre said.

For the next 12 months, the employment outlook index was also higher at 32.4 percent from 24.3 percent.

“The higher positive readings suggest that firms are looking forward to hiring more people for the first quarter of 2022 and the next 12 months,” Alegre said.

The Philippines emerged from the pandemic-induced recession with a back-to-back gross domestic product (GDP) growth of 12 percent in the second quarter and 7.1 percent in the third quarter.

This prompted the Development Budget Coordination Committee (DBCC) to raise its GDP growth target to a range of five to 5.5 percent from the original target of four to five percent for this year.

With the reopening, Alegre said companies severely affected by the pandemic are now pursuing expansion plans as 23.2 percent of the respondents have expressed interest in beefing up their operations in the first quarter of next year, higher than the previous quarter’s 9.6 percent.

For the next 12 months, Alegre said the percentage of companies with expansion plans declined slightly to 26.8 percent from 27.3 percent.

The survey conducted from Oct. 8 to Nov. 18 and covered 1,511 companies showed the average capacity utilization of the industry and construction sectors in the fourth quarter from 70.6 percent in the third quarter.

This development is consistent with the results of the Monthly Integrated Survey of Selected Industries (MISSI) of the Philippine Statistics Authority (PSA), which likewise, showed a higher level of capacity utilization in the third quarter compared to the results of the previous quarter.

Alegre said the business confidence index turned sharply higher in the fourth quarter.    “The outlook of business owners on the economy turned optimistic as the overall confidence index reverted to the positive territory at 39.7 percent, the highest level since the onset of the COVID-19 pandemic in the country in the first quarter of  2020, from -5.6 percent in the third quarter of 2021,” Alegre said.

Aside from the stronger-than-expected GDP growth in the third quarter, Alegre said respondents also cited the easing of COVID restrictions and opening of borders due to the decreasing number of infections, the increasing demand and sales, continuing vaccine rollout leading to herd immunity as well as the uptick in demand during the Christmas season.

Likewise, Alegre said the country also reported higher business confidence index of 52.8 percent from 31.9 percent in the first quarter of next year as well as 67.6 percent from 56 percent for the next 12 months.

Alegre said the survey results showed that businesses expect the peso to continue depreciating against the dollar and peso borrowing and inflation rates to rise in the current quarter, in the first quarter of next year, and in the next 12 months.