Slower expansion, hiring seen in Q4

MANILA, Philippines - Companies are expected to go slow on their expansion as well as the hiring of more workers in the fourth quarter due to the slowdown in the manufacturing sector, 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 percentage of businesses with expansion plans for the fourth quarter declined to 28.1 percent from 30.3 percent in the previous quarter.

Guerrero attributed the decline to the weaker expansion plans of firms in the manufacturing sub-sector.

She added the average capacity utilization for the third quarter this year was higher at 74.9 percent from 74 percent in the previous quarter.

“The number of firms with expansion plans declined while capacity utilization increased,” she said.

Likewise, Guerrero said the employment outlook index for the next quarter was broadly steady at 23.6 percent from 23.8 percent in the last quarter’s survey.

“The positive reading indicates that more firms will continue to hire new employees than those that said otherwise,” she said.

According to her, the outlook of firms on their hiring intentions was more optimistic in the wholesale and retail trade and industry sectors, steady in services, and less upbeat in construction.

The optimism of the country’s business sector remained high in the third quarter seasonal factors. The overall confidence index hit 45.4 percent for the third quarter but was lower than the 48.7 percent booked for the second quarter.

The less buoyant outlook for the third quarter was due to the expectations of interruption in 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.

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.

For the fourth quarter, 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 as well as increased confidence in the Duterte administration.

The country’s gross domestic product (GDP) growth accelerated to seven percent in the second quarter from the revised 6.8 percent in the first quarter due to the boost from election related spending.

This brought the GDP expansion to 6.9 percent in the first half of the year from 5.5 percent in the same period last year. Economic managers have lowered the GDP growth target to a range of six to seven percent instead of 6.8 to 7.8 percent this year.