Consumers’ confidence hits new high of 9.2% in Q4

By Riza Lozada

Consumer confidence surged in the fourth quarter due to “improved peace and order,” “effective government poli­cies” and the “availability of more jobs,” according to a survey conducted by the Bangko Sentral ng Pilipinas (BSP).

The BSP’s Consumer Expecta­tions Survey showed that the overall confidence index (CI) rose to a new peak of 9.2 percent in the fourth quar­ter from a previous all-time high of 2.5 percent in the third quarter.

“This is the second consecutive quarter that consumer confidence registered a positive reading, indicat­ing that the number of households with optimistic views increased and outnumbered those with pessimis­tic views,” said BSP Deputy Governor Diwa Gunigundo.

The confidence index has been in the negative territory since the survey was launched in 2007 until it turned positive at the third quarter of this year.

The CI is computed as the per­centage of households that answered in the affirmative, less the percentage of households that answered in the neg­ative with respect to their views on a given indicator.

Respondents in the survey cited as reasons for their optimism improve ments in the peace and order situation, effective government policies such as the policy to end job contractualiza­tion or “endo,” the no-window-hour policy in the number-coding scheme to address the traffic situation, as well as the anticipated increase in salaries, and the availability of more jobs.

Respondents also cited assis­tance from the government, such as the Pantawid Pamilyang Pilipino Pro­gram (4Ps), the leadership of Presi­dent Duterte, reduced corruption, the all-out campaign against illegal drugs and the improvement in services of various government agencies.

For the first quarter of next year, however, Teresita Derveza, deputy director of the BSP’s Department of Economic Statistics, said the survey showed Filipino consumers being less optimistic.

Still, she said, the figures showed that while the number of households with positive outlook decreased, they continued to exceed those with nega­tive views.

The survey also showed confi­dence was strongest on the country’s economy, followed by family income and family financial situation.

For the first quarter of next year, consumers’ views on all three indica­tors turned less optimistic, with the index on the economic condition of the country recording the biggest de­cline quarter-on-quarter.

According to respondents, their less positive outlook was due primar­ily to the anticipated higher prices of goods, depreciation of the peso, in­crease in unemployment, problems on the peace and order situation, and no increase in salaries and wages in the near term.

The BSP conducted the survey from October 3 to 14 on individuals taken from the Philippine Statistics Authority (PSA) Master Sample List of Households, which is considered a representative sample of households nationwide.

It has a sample size of 6,036 households, of which 3,098 (51.3 per­cent) were from the National Capital Region (NCR) and 2,938 (48.7 per­cent) from elsewhere.

Of the sample size, 5,836 house­holds responded to the survey, equiv­alent to a response rate of 96.7 percent from 96.9 percent in the last quarter’s survey.

Nearly half of the respondents (45.7 percent) were from the low-in­come group, 39.5 percent from the middle-income group, and 14.9 per­cent from the high-income group.

The improvement in consumer outlook for the current quarter was generally observed across all income groups.

Consumers from the low- and middle-income groups were less op­timistic across all component indica­tors.

Meanwhile, the high-income group was more upbeat on family fi­nances and family income but less positive on the economic condition of the country.

Respondents expect spending on electricity, fuel, medical care, transpor­tation, and personal care and effects to increase for the first quarter of next year.

The spending outlook index of households on basic goods and ser­vices was broadly steady at 28.2 per­cent for the next quarter, indicating that respondents who expect to spend more on goods and services out­numbered those who said otherwise. However, the number that said so re­mained nearly unchanged compared to the previous quarter’s survey.

“Across commodity groups, the spending outlook was mixed. More respondents expected an increase in expenditures on electricity, fuel, med­ical care, transportation and person­al care and effects, while a decline in spending was noted for clothing and footwear,” the survey noted.

The spending outlook was steady for food, non-alcoholic and alcoholic beverages, house rent and furnishing, water, communication, education, recreation and culture, and restau­rants and cafes, it said.

The percentage of households that considered the current quarter as a favorable time to buy big-ticket items increased to 30.2 percent from 28.2 percent for the third quarter.

“The more favorable outlook on buying conditions was evident across all big-ticket items, namely, consumer durables, motor vehicles, and house and lot. Buying intentions of respon­dents for all big-ticket items for the year ahead were broadly steady at 10.6 percent.

The percentage of households with savings moderated slightly for the fourth quarter, declining slight­ly to 32.6 percent in the last quarter from 33.1 percent the previous quar­ter.

Respondents said they raise savings for emergencies, education, health and hospitalization, retirement, purchase of real estate, and business capital and investment.

Two-thirds (66.6 percent) of household savers had bank accounts, while 46.7 percent kept their savings at home and 34.6 percent put their money in cooperatives, “paluwagan,” other credit and loan associations, and as investments such as stocks and insurance, including in state pension funds.

The percentage of respondents that reported they could set aside money for savings during the cur­rent quarter declined slightly to 41.1 percent from 41.6 percent in the third quarter.

However, the proportion of those that could set aside 10 percent or more of their monthly gross fami­ly income was higher at 42.4 percent from 40 percent in the third quarter.

Respondents anticipated infla­tion to increase to 2.7 percent for the fourth quarter from 1.8 percent in the previous survey.

Likewise, the number of re­spondents with views of higher in­flation increased, compared to that a quarter ago, reflecting stronger in­flationary expectations over the next 12 months.

More respondents expected in­terest rates to increase and the peso to depreciate against the US dollar over the next 12 months.

Meanwhile, the unemployment index remained in the negative ter­ritory at negative 9.3 percent (from negative 27.8 percent in the third quarter).

The BSP said this means that more respondents compared to those who said otherwise expect­ed unemployment to decline over the next 12 months, although the number that indicated so was lower compared to the previous quarter, suggesting better employment op­portunities.

Of the 500 households included in the survey that received overseas Filipino workers (OFW) remittances for the fourth quarter, 96.4 percent used remittances to buy food and other household needs.

The households that get OFW remittances use the money for ed­ucation (70 percent), debt payments (42.8 percent), purchase of consum­er durables (22.2 percent), purchase of house (13 percent), and purchase of motor vehicles (8.8 percent).

Notably, those who set aside part of the remittances for savings and investment rose to 46.8 percent from 39.6 percent a quarter ago and 10 percent from 3.8 percent in the previous quarter’s survey results, re­spectively.

The percentage of OFW house­holds that allocated part of their re­mittances for medical expenses (55.2 percent) remained the same while those that used their remittances for other miscellaneous expenses (2.8 percent) declined.