Firms put on hold expansion plans

MANILA, Philippines — Companies severely affected by the pandemic are putting on hold their expansion plans, but intend to resume hiring more workers as the economy gradually reopens, according to the Bangko Sentral ng Pilipinas (BSP).

Redentor Paolo Alegre, senior director of the BSP’s Department of Economic Statistics, said the results of the third quarter 2021 Business Expectation Survey (BES) showed the percentage of businesses with expansion plans for the fourth quarter dropped to 9.6 percent from 21.1 percent in the previous quarter.

Alegre said the percentage of firms that expressed expansion plans for the fourth quarter decreased across all industry sub-sectors, except for the agriculture, fishery and forestry sub-sector.

Likewise, he also said the percentage of companies with expansion plans for the next 12 months slipped to 27.3 percent from 27.8 percent.

For the next 12 months, more firms from the agriculture, fishery and forestry sub-sector expressed their plans to expand, but the percentage of firms from the manufacturing sub-sector remained relatively unchanged.

On the other hand, the percentage of firms with expansion plans in mining and quarrying, and electricity, gas and water sub-sectors decreased for the next 12 months.

“Fewer firms plan to expand for the fourth quarter of 2021 and the next 12 months,” he said.

In terms of employment, Alegre said businesses intend to hire more workers for the remainder of the year, as well as the next 12 months as the country gradually recovers from the pandemic-induced recession.

“The employment outlook is more optimistic,” he said.

Data showed the employment outlook index increased to 6.2 percent from five percent for this quarter and to 24.3 percent from 14.7 percent for the next 12 months.

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

The Philippines exited the pandemic-induced recession with a gross domestic product (GDP) growth of 11.8 percent in the second quarter from a 3.9 percent contraction in the first quarter.

The BES, conducted from July 22 to Sept. 15 covering 1,511 enterprises, showed that the business confidence on the economy turned pessimistic after three straight quarters of optimism.