Consumer confidence edges higher to -17.3% in the 2nd quarter

MANILA, Philippines – The Filipino consumers’ optimism continued to improve in the second quarter at -17.3%, a slight increase from the previous quarter’s -18.8%, the Bangko Sentral ng Pilipinas (BSP) reported, Friday, June 13.

Based on the Consumer Expectations Survey results, the overall confidence index (CI) while improved, remains negative as the number of households with an optimistic outlook are still outnumbered by those who think otherwise.

Respondents attributed their more favorable outlook to the following factors:

Meanwhile, consumer sentiment turned less upbeat as the CI declined to a neutral value of 0% from 5.4% in the first quarter and 15.9% from 19.3% in the same quarter, respectively. 

The less upbeat outlook is attributed to expectations of lower income due partly to poor harvests and slower business activities during the rainy season which could cause work interruptions.

Higher household expenses (education and maintenance medicines) and less job opportunities, which is consistent with their views of higher unemployment over the next 12 months, also contributed to the less upbeat outlook.

Lingering issues on graft and corruption in the government also contributed to the gloomy outlook for the next quarter and the year ahead.

Buying sentiment and saving behavior

The overall consumer confidence is measured using 3 indicators – economic condition of the country, family financial situation, and family income.

High- and middle-income group showed increased confidence for the quarter, the survey revealed. Notably, consumer confidence in family finances and income of the middle-income group reached record high CIs at 2.1% and 12.4%, respectively.

Meanwhile, the outlook of the low-income group declined on family finances and income, even as their outlook on the economy improved. For the next quarter and the year ahead, sentiment across income groups turned less upbeat.

On buying sentiment, the positive spending outlook of respondents on basic goods and services remained steady for the third quarter. Across commodity groups, fewer respondents expected higher spending on clothing and footwear, house rent, electricity, fuel, medical care, communication, restaurants and cafés, and personal care and effects, while more respondents anticipated an increase in expenditures on food, water, and education due largely to the opening of the school year. The spending outlook was steady for transportation.

Buying big-ticket items also look favorable for this quarter, according to 24.6% of respondents.

The outlook on buying real estate was the most optimistic, posting a record high of 32.2% since the first quarter of 2007, while a stable outlook was observed for buying consumer durables and motor vehicle. Meanwhile, buying intentions of respondents for all big-ticket items for the year ahead remained unchanged at 8.6%.

The survey results also showed that households with savings continued to rise at 30.3% compared to 28.9% in the previous quarter.

Households with savings increased among the middle- and high-income groups, but remained steady for the low-income group. According to respondents, they save money for emergency; health and hospitalization; retirement; education; and business capital and investment (house and lot).

Almost two-thirds or 65.2% of household savers have bank deposit accounts, while 23.5% kept their savings at home and 11.4% put their money in cooperatives, paluwagan, and other credit/loan associations, as well as in government non-financial institutions, such as Social Security System, Pag-ibig, and PhilHealth.

The percentage of respondents who could set aside money for savings in the second quarter declined to 35.7% from 38.3% in the previous quarter. Moreover, those who could save 10% or more of their monthly family income decreased to 36.3% from 43.2% in the previous quarter’s survey results.

Expenditures of Overseas Filipino Workers (OFWs)

Of the 560 households included in the survey that received OFW remittances in the second quarter, 96.1% said they used the remittances to buy food. 

More than two-thirds or 69.5% of the OFW households allocated part of their remittances for education; 64.6% for medical expenses; and 48.9% for debt payments.

OFW households that utilized their remittances for savings rose to 46.6% from 45.4% in the first quarter, the second highest percentage since the nationwide survey started in first quarter of 2007. Similarly, those that allocated their remittances for purchasing consumer durables and for investment increased. Meanwhile, those that apportioned part of their remittances for motor vehicle and house remained broadly steady.

Expectations on selected economic indicators

Respondents anticipated inflation declined to 6.1% from 8.4% in the first quarter, reflecting their outlook of more stable prices for the year ahead.

Such outlook indicates that inflationary expectations could moderate in the next  12 months as the number of respondents with views of higher inflation decreased compared to a quarter ago.

Likewise, consumers’ expectations of higher interest rates showed a declining trend as the CI edged lower for this quarter’s survey.

Respondents also projected the peso would continue to depreciate against the US dollar in the next 12 months, although fewer respondents have indicated so compared to the previous quarter's survey, partly influenced by the continuous weakening of the peso against the dollar. (The average peso per dollar rate during the survey was P45 compared to P44 in December 2013.)

Meanwhile, more respondents expected unemployment to rise over the next 12 months as the CI increased to 54.5% from 41.4% in the last quarter’s survey.

The Consumer Expectations Survey is done quarterly using a random sample of about 5,000 households in the Philippines. –