Business expectation eases in Q3

MANILA, Philippines - Business sector optimism hit a record high in the third quarter, 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 the overall confidence index based on the Business Expectation Survey (BES) stood at 45.4 percent for the third quarter, the highest ever reading for the period.

“Despite the typical decline in sentiment during the third quarter due to seasonal factors, the current quarter index is the highest third quarter reading of all time,” she said.

Guerrero, however, said the third quarter confidence index was lower than the 48.7 percent recorded in the second quarter as the number of optimists declined, but continued to be greater than the number of pessimists.

She attributed the less buoyant outlook for the third quarter to the expectations of interruption of business activities during the rainy season, the slack in demand during the planting and closed milling seasons, and the closed fishing season in Davao gulf from July to September.

She added respondents also cited lower consumer demand as households prioritized enrolment expenses, stiff competition as well as the implementation of stricter new mining policies that put some mining concessions on hold.

Guerrero explained concerns over the weak global economy continued to affect business sentiment.The sentiment of the businesses in the Philippines, she said, mirrored the less buoyant business outlook in the US, United Kingdom, Germany  and Hong Kong.

The survey was conducted from July 1 to 12 and covered 1,474 companies nationwide.

BSP managing director Francisco Dakila Jr. said the confidence index usually decline during the third quarter from the second quarter due to seasonal factors.

Since 2011, he pointed out the business confidence index for the third quarter declined four times from the second quarter and only improved once.

For the fourth quarter, Guerrero said sentiment turned more upbeat as business confidence index improved to 56.8 percent from 45.3 percent due to the expected uptick in consumer demand during the Christmas season.

According to Guerrero, the survey also cited increased confidence in the Duterte administration.

The respondents are also more bullish for the fourth quarter due to continued increase in orders and projects translating to higher volume of production, expansion of business and new product lines as well as the introduction of new and enhanced business strategies.

Some respondents also cited improved farm gate prices as well as the opening of high seas or fishing operations in October.

 “Their more positive outlook was further driven by expectations of an acceleration in the roll out of infrastructure and other development projects under the public private partnership program and the favorable macroeconomic conditions in the country, sustained foreign investment inflows and the steady stream of overseas Filipinos’ remittances,” Guerrero added.