Tuesday, 17 March 2009

Consumer Confidence Up in the Philippines

Media Releases
Bangko Sentral

Nationwide consumer confidence higher

Despite continuing concerns over recessionary conditions in the global economy, consumer confidence of Filipino households improved significantly quarter-on-quarter and year-on-year in Q1 2009, even as the number of respondents with a pessimistic outlook continued to be larger than the number of respondents with a favorable outlook. The overall consumer confidence index (CI) in Q1 2009 at -25.7 percent was higher by 14.6 index points relative to Q4 2008 and by 6.4 index points year-on-year. Improved consumer confidence was partly due to lower prices of oil and other food items, and positive news that the unfolding global financial crisis will not hit the Philippines as hard as other more advanced economies.

The optimists attributed their positive outlook to expected improvement in household finances, lower personal debts, and employment of more household members. Meanwhile, pessimists were concerned about low income, higher costs of agricultural inputs and increase in household expenses.

The next quarter outlook at -6.2 percent also improved relative to the previous quarter. However, it was lower by 2.8 index points relative to Q1 2008.

Respondents also expected that conditions would improve over the next 12 months as the index increased to -2.3 percent from -10.7 percent in Q4 2008. However, the index was lower by 8.9 index points compared to 12-month ahead outlook during the Q1 2008 survey.

Consumer confidence across all income groups up

Consumer confidence across all income groups similarly improved. Respondents from the highest income group were the most confident. Specifically, respondents from the high and middle income groups were optimistic that family income would increase in Q1 2009 with CIs of 11.0 percent and 6.7 percent, respectively. In the case of the low income group, while the index remained negative at -19.3 percent, it improved by 7.5 index points quarter-on-quarter and by 4.0 index points year-on-year.

Expenditures for next 3 months to rise

Survey results indicated that more households nationwide expected that their average expenditures on basic goods and services would go up in Q2 2009 with a CI of 40.7 percent. However, there were fewer respondents who said that their expenditures would rise compared to the previous quarter’s survey as indicated by the 4.3 percent decline in the index quarter-on-quarter. This may be partly explained by the deceleration in inflation rates and the observed tendency of consumers to cut back spending in Q1 to save for the coming school enrollment period in Q2.

Buying conditions improve in Q1 2009

The proportion of respondents who considered Q1 2009 as a favorable time to buy reached 17.5 percent, a slight increase from 15.0 percent a quarter-ago, but lower than the year-ago level at 20.4 percent. Buying conditions for a house and/or lot were highest at 24.8 percent, up by 2.8 percentage points from Q4 2008. There were also more respondents who considered Q1 2009 as a good time to buy consumer durables (16.5 percent from 14.0 percent in Q4 2008) and motor vehicles (11.3 percent from 9.1 percent in Q4 2008).

Among the reasons cited by respondents on the favorable buying conditions on big-ticket items in Q1 2009 were: 1) affordability, 2) good investment options, and 3) for the convenience of family members.

Buying intentions for the year ahead positive

Despite the positive outlook for Q1 2009, the proportion of respondents that indicated their intentions to buy big-ticket items (namely, consumer durables, motor vehicles, and house and lot) in the next 12 months remained relatively steady at 7.5 percent. About 10 in every 100 respondents indicated intention to buy consumer durables, 8 in every 100 indicated intention to buy a house and lot, and 5 in every 100 indicated intention to buy motor vehicles in the next 12 months.

Selected Economic Indicators: Outlook for the next 12 months

Consumers anticipated that the peso would continue to depreciate against the US dollar in the year ahead as the CI on the exchange rate in Q1 2009 survey registered a negative index at -10.8 percent. The unemployment rate and interest rates were expected to rise with CIs at 72.4 percent and 45.4 percent, respectively. Moreover, more consumers than otherwise expected that the prices of basic goods and services would go up in the next 12 months with CI of 46.2 percent. However, of those expecting upward price pressures, their inflation expectations have moderated. Except for the unemployment rate index, all the indices showed that the number of respondents which expected weaker indicators in the next 12 months declined.

Expenditures of Overseas Filipino Workers for Q1 2009

Based on survey responses, one out of ten households has at least one OFW as family member. In Q1 2009, most OFW households spent their remittances primarily on food and other household needs (94.7 percent of households who received remittances), education (69.8 percent), medical expenses (55.2 percent), and debt payments (48.5 percent). The percentage of households that allotted portions of remittances to savings increased to 40.0 percent (from 35.8 percent in Q4 2008). Those that utilized remittances for investments increased to 5.9 percent in Q1 2009 (from 4.7 percent in Q4 2008), while 11.2 percent of OFW households used remittances for purchasing houses. The utilization pattern of remittances was similar for both NCR and AONCR households.

About the survey

The Bangko Sentral ng Pilipinas started conducting the Consumer Expectations Survey (CES) in the National Capital Region in Q3 2004. The CES became a nationwide survey starting Q1 2007. For Q1 2009, the CES was conducted during the period 12-23 January 2009 with a total sample size of 5,487 households, of which 2,724 (49.6 percent) were from NCR and 2,763 (50.4 percent) from AONCR. The CES samples were drawn from the National Statistics Office’s (NSO) Master Sample List of Households, which is considered a representative sample of households nationwide. The said master sample was generated using a stratified multi-stage probability sampling scheme. The nationwide total survey response rate for Q1 2009 was 96.4 percent (broadly similar to 96.6 percent in the last survey).

For inquiries, please contact the Department of Economic Statistics

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