Businesses turn more optimistic

Manila, Philippines — Business sentiment in the Philippines brightened in August, with firms projecting stronger holiday consumer demand and activity, despite remaining cautious about the broader outlook. The Bangko Sentral ng Pilipinas (BSP)'s Business Expectations Survey (BES) indicated the confidence index (CI) for the next three months surged to 24.6 percent in August from 3.7 percent in July, reflecting a shift in business optimism.

The CI gauges the disparity between firms with positive and negative views, with a higher score denoting a predominance of optimists. Businesses were particularly upbeat about November, buoyed by surging demand for consumer and financial products and services, as cited by 52.9 percent of positive respondents, alongside heightened business activity during the holiday and rice harvest seasons, mentioned by 23.5 percent.

The CI for the upcoming twelve months also improved to 36.4 percent from 29.4 percent in July, with firms anticipating robust consumer spending in sectors like tourism, construction, education, and finance, along with easing inflation, hopes for resolving the Middle East conflict, better business operations, and increased investor confidence.

Despite these positive indicators, businesses maintained a pessimistic outlook for August, with the CI dropping to -10.9 percent from -20.3 percent in July, though this improvement was driven by greater demand for essentials, loan products, and construction activities. Employment prospects also brightened, with the hiring intentions index rising to 30.7 percent from 9 percent.

However, the percentage of firms planning to expand operations fell to 17.1 percent from 20.8 percent. Meanwhile, the Consumer Expectations Survey (CES) revealed households becoming increasingly less pessimistic in the third quarter, with the consumer CI improving to -29.8 percent from -42 percent in the second quarter, primarily due to expectations of higher earnings, alternative income sources, and job stability.

For the fourth quarter, the index saw a significant jump to -0.8 percent from -16.3 percent in the previous survey, albeit with optimists still lagging behind pessimists. Consumers turned more positive about the next twelve months, with the year-ahead CI improving to 9.1 percent from 0.2 percent. The BSP conducted the August BES from August 5 to 31, surveying 501 firms nationwide, and the third-quarter CES from July 1 to 13, reaching out to 5,476 households.