Consumers pessimistic, BSP reports

Filipino consumers remained pessimistic in the second quarter as result of the expected lower household income, particularly among middle and low-income families, resulting from the economic slowdown, the central bank reported Thursday.

In the Consumer Expectation Survey, Rosabel Guerrero of the central bank’s Department of Economic Statistics, said the overall consumer confidence index fell to negative 34.2 percent for the second quarter, worse than the negative 25.7 percent posted in the first quarter.

“The impact of the global economic slowdown continued to weigh down on consumer sentiment, with consumer confidence declining moderately in the second quarter after registering an improvement in the first quarter,” Guerrero said.

The middle-income group, those with a monthly salary from P10,000 to P30,000, was the most affected by the economic downturn as the confidence index of families in that bracket fell to negative territory—minus 1.1 percent—in the second quarter from 6.7 percent in the first quarter. This means that the middle-income group expected lower income in the second quarter, perhaps because they were mostly fixed-income earners from the manufacturing sector, Guerrero explained.

The high-income group—those with a monthly salary of P30,000 or more—appeared to be relatively less affected by global economic slowdown with positive indices in family income at 14.3 percent and financial situation at 3.7 percent. Those numbers indicated better income in the second quarter.

Buying intention

Despite the expected lower income of the middle-income countries, the buying intention of the Filipino consumers surveyed increased.

“The buying intention remains to be strong,” said Diwa Guinigundo, central bank deputy governor. “It’s possible that the buying intention can be translated to buying activity.”

The country’s gross domestic product (GDP) posted an anemic growth of .4 percent in the first quarter because of slower consumption growth, which registered 0.8 percent, and an increase in savings.

GDP, a key measure of the economy, is the total cost of all final goods and services produced in a country in a year.

More households nationwide expected their expenditures on basic goods and services to go up in the third quarter.

For expenditures category, the confidence index for the second quarter increased by 3.7 index points to 44.4 percent, which suggested that consumers felt it was a favorable time to buy big-ticket items.

But the percentage of respondents who considered the second quarter as a favorable time to buy big-ticket items declined slightly to 15.8 percent in the second quarter, from 17.5 percent in the first quarter.

This was driven by the less favorable sentiments by respondents outside of Metro Manila on the buying conditions for consumer durables and housing.

The buying conditions for motor vehicles of respondents in Metro Manila and those elsewhere remained steady.

But the decline in the outlook on buying conditions has not affected households’ buying intentions for big-ticket items. The highest percentage of buying intentions showed in consumer durables, followed by housing, then motor vehicles.

Feelings on forex

According to the same central bank report, consumers anticipated the peso to depreciate against the US dollar in the year ahead, even as more consumers expect the prices of goods and service to go up in the next 12 months.

But consumers expect the inflation rate to stabilize because of the moderate price increase of non-food items, such as clothing, electricity, water, medical care, transportation, communication and personal care.

The central bank survey included 572 households with overseas Filipino workers, and 96.2 percent of them reported that they spent part of their remittances on food and other household needs. Some 68.2 percent of the households used their remittances on education, and 51 percent on debt payments.

The respondents also indicated lower savings because of increased investments in the second quarter.

The central bank conducted the survey from April 1 to 15 with a total sample size of 5,909 households—50.3 percent of them were in Metro Manila. The response rate was 96.1 percent.
–Maricel E. Burgonio, Manila Times