Business expansion, hiring to slow in Q3
MANILA, Philippines – Companies are going slow on their expansion plans and the hiring of more workers in the third quarter due to the projected slowdown in economic activity, results of a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.
Rosabel Guerrero, director of the BSP’s Department of Economic Statistics, said results of the Business Expectations Survey (BES) for the second quarter showed the employment outlook index declined to 23.8 percent from 27.2 percent in the last quarter.
“This indicates more firms will continue to hire new employees than those that said otherwise, although the number of new hires could decrease compared to the previous quarter’s survey,” Guerrero said.
Guerrero said firms across sectors were less optimistic except those in the wholesale and retail trade sector which were more upbeat in their hiring intentions.
Furthermore, she said the percentage of businesses with expansion plans in the industry sector for the third quarter slipped to 30.3 percent from 31.3 percent.
“The outlook was weaker across industry sub-sectors, except for the manufacturing sub-sector which recorded steady expansion plans.
Guerrero said the slowdown in the expansion and employment hiring plans of businesses is consistent with the lower outlook in the industry sector for the next quarter.
The survey showed the average capacity utilization for the current quarter declined to 74 percent from 74.8 percent a quarter ago.
Following a similar trend, Guerrero said the results of the Monthly Integrated
Survey of Selected Industries (MISSI) of the Philippine Statistics Authority (PSA) showed a slightly lower capacity utilization in the first quarter.
For his part, BSP Deputy Governor Diwa Guinigundo said the sanguine outlook for the third quarter is due to the expectation of higher oil prices as well as the interruption of business activities during the rainy season.
Guinigundo also cited lower consumer demand as households prioritize enrollment expenses.
For the third quarter, the survey showed business optimism remain higher although the outcome was lower with the confidence index declining to 45.3 percent from 49.6 percent.
The country’s gross domestic product (GDP) growth accelerated to 6.9 percent in the first quarter of the year from the revised 6.5 percent in the fourth quarter, making it the fastest growing economy in Asia.
Economic managers have penciled a GDP growth of between 6.8 and 7.8 percent this year after slowing down to 5.9 percent last year from 6.1 percent in 2014 due to weak global demand and lack of government spending.
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