Better consumer sentiment, business optimism noted in Q4

Consumer sentiment has improved and businesses are more optimistic in the fourth quarter, according to the latest results from the Bangko Sentral ng Pilipinas (BSP) Consumer Expectations Survey (CES) and Business Expectations Survey (BES).

The CES, released late Thursday, showed a more favorable outlook among consumers, with the overall confidence index (CI) improving to -11.1 percent in the fourth quarter from -15.6 percent in the previous quarter.

The CES, which surveys about 5,000 randomly selected households in the Philippines, evaluates consumer outlook on economic conditions, family financial situations, and family income. The BSP attributed the improved sentiment to higher and additional sources of income, more working family members, and an increase in job opportunities and permanent employment.

Consumer confidence for the first quarter of 2025 and the following 12 months also saw an uptick, with expectations of higher income, additional sources of income, and more available jobs fueling optimism.

In terms of business outlook, the BES revealed a more optimistic perspective, with the overall CI rising to 44.5 percent in the fourth quarter, up from 32.9 percent in the third quarter.

The BES surveys firms randomly selected from the top 7,000 corporations, ranked by total assets. It provides insights into future business activity and economic trends. The BSP noted that the positive outlook among businesses was driven by expectations of increased demand for certain goods and services, along with a seasonal boost in business activities.

These expectations include higher demand for agricultural products, infrastructure projects, shipping and distribution services, transportation units, chemicals, and educational services, among others.

However, business confidence for the first quarter of 2025 showed a decline, with the overall CI dropping to 40.3 percent from 56.8 percent in the previous quarter. Firms expressed concerns about a post-holiday drop in demand, intense competition, economic uncertainty leading to the midterm elections, peso depreciation, and rising production costs.

Similarly, the 12-month outlook for businesses was slightly less optimistic, with the overall CI falling to 56.4 percent from 58.0 percent in the third quarter. Businesses cited concerns over weaker demand, geopolitical tensions, competition, and the potential for rising inflation.