By Katherine K. Chan, Reporter
LOWER oil prices and increased consumer spending as classes reopened helped Philippine business sentiment recover in June after three straight months in negative territory, a survey by the Bangko Sentral ng Pilipinas (BSP) showed.
The BSP’s monthly business expectations survey (BES) yielded a 0% current-month confidence index (CI) in June, improving from the -25.2% in May.
A neutral or zero CI shows that optimistic and pessimistic respondents are nearly equal in number. A positive CI shows that more respondents are optimistic than pessimistic, while a negative CI shows otherwise.
“Philippine business sentiment improved in June as firms expected lower oil prices and energy costs to support increased business activity during the period, results of the latest Business Expectation Survey show,” the central bank said in a statement on Friday.
“BES data also show firms anticipated a boost in consumer spending following the reopening of schools during the month.”
The survey also showed businesses were more optimistic for the third quarter and the next 12 months.
For the next three months, firms’ CI stood at 18.8%, jumping from the 0.6% recorded in May, amid optimism that was driven by expectations of higher household consumption and easing inflation pressures.
Meanwhile, their CI for the year ahead rose to 42.4% in June from 27.8% in May as they anticipate stronger demand for goods and services among consumers, as well as better local and global economic conditions amid hopes of a resolution to the Middle East war.
However, businesses surveyed still expect inflation to remain above the BSP’s 4% ceiling, with their year-ahead projection at 5.6%. Still, this was slower than their 5.9% estimate in May.
“Businesses that expect higher inflation were concerned about higher energy cost and supply constraints, the ongoing Middle East conflict, (and) peso depreciation,” the central bank said.
Inflation as of June averaged 4.8% as high oil prices and spillovers to other key commodities continued to drive the headline print past the BSP’s tolerance range.
The central bank expects inflation to average 6.4% this year.
TIGHTER FINANCIAL CONDITIONS
Meanwhile, Philippine firms see tightening financial conditions but slightly easing credit access, citing stiff domestic competition, insufficient demand, and financial concerns.
Businesses’ financial condition index, which gauges their general cash position considering the level of cash and other cash items and repayment terms on loans, worsened to -26.8% in June from -25.7% in May.
On the other hand, their credit access index improved month on month to -5.7% from -7.3%. This refers to the firm’s external environment, such as the availability of credit in the banking system and other financial institutions.
Firms’ average capacity utilization for the industry and construction sectors also climbed to 73.9% in June from 70.5% last month.
Meanwhile, Philippine businesses’ employment outlook index fell to 1.8% from 11.9% for the next three months, and to 20.2% from 20.4% for the coming year.
However, the survey showed that more firms were willing to expand, with 20.4% saying they are looking to boost operations over the next quarter from 9.7% in May. For the year ahead, 18.7% expressed their intent to expand, higher than the 11.8% a month ago.
“Overall, the favorable business outlook could support economic growth for 2027,” the central bank said.
The BSP surveyed 515 firms nationwide, with 193 coming from the National Capital Region (NCR) and 322 from areas outside NCR, from June 5-30.
