Business confidence at all-time high – poll

MANILA, Philippines – Business confidence for the fourth quarter has hit an all-time high on the back of higher-than-anticipated economic growth, stronger peso, robust overseas remittances, benign inflation, strong export earnings, and smooth transition of political power.

“Businesses’ sanguine outlook was more pronounced in the quarter ahead (fourth quarter), reaching an all-time high of 59.2 percent since the nationwide survey started in the fourth quarter of 2003,” Rosabel Guerrero, director of the Department of Economic Statistics of the Bangko Sentral ng Pilipinas, said, referring to results of the latest Business Expectations Survey.

Business confidence for the fourth quarter was at 45 percent.

The confidence index is the percentage of firms that answered in the affirmative minus the percentage of firms that answered in the negative to questions regarding their views on a given indicator. A positive confidence index indicates a favorable view.

Guerrero said the all-time high confidence index for the next quarter eclipsed the previous record of 49.4 percent in the first quarter of 2007.

She explained that the sentiment of businessmen has remained positive since the third quarter of 2009.

Data showed that confidence index has steadily improved from 18.4 percent in the third quarter of last year, 22 percent in the fourth quarter, 39.1 percent in the first quarter of this year, 43.9 percent in the second quarter, and 45 percent in the third quarter.

The confidence index plunged to negative 12.9 percent in the third quarter of 2008 or at the height of the financial meltdown in the US. The index plunged to a negative 23.9 percent in the first quarter of 2009 before improving to negative 2.9 percent in the second quarter.

“Respondents attributed their optimistic outlook to the steady growth of OFW remittances, smooth transition of power and favorable expectations on the new government that could boost investor confidence in the economy, better performance of exports and sustained investment inflows, and the government spending on infrastructure, social services and environment protection that could spur business activity,” Guerrero told a press briefing.

President Aquino has vowed to eliminate graft and corruption as well as put the Philippines back on the fiscal consolidation path by trimming the budget deficit to two percent of the gross domestic product by 2013 from the current level of 3.9 percent of GDP.

Guerrero said the improvement in the overall outlook is consistent with the solid macroeconomic gains as underpinned by the narrowing of the country’s credit spreads, rising equity index, appreciating peso, and easing inflation.

Socioeconomic Planning Secretary Cayetano Paderanga earlier said the GDP growth in the second quarter of the year was not far from the stronger-than-expected expansion of 7.3 percent registered in the first quarter.

Guerrero said the favorable business sentiment mirrored the improving business confidence in Canada, Hong Kong, India, Indonesia, Germany, and Italy.

She added that business morale in the National Capital Region was at 51.6 percent in the third quarter from 50.1 percent in the second quarter while that of areas outside NCR was at 34.2 percent from 34 percent.

She explained that businesses across sectors continued to have more favorable outlook in the third quarter reflecting the improved overall business sentiment.

“Favorable business sentiment was observed across all sectors. The business morale of the industry sector was more buoyant while the optimism of the services, construction, and trade was steady or slightly tempered to the second quarter due in part to the usual downtrend in business activities during the quarter,” the BSP official said.

Data showed that business confidence was also highest in the industry sector at 49.6 percent due to higher volume of international and domestic orders and with the diversified markets boosting further the outlook in the third quarter.

The survey also showed that credit to access continued to improve as more firms reported a significant increase in their access to credit compared to the situation in the second quarter.

Furthermore, the employment outlook of the respondents hit an all-time high of 24 percent as respondents vowed to hire more workers to be able to serve strong demand in the fourth quarter of the year.

Guerrero said companies likewise vowed to expand their presence in the country as 27 percent of respondents revealed they would rev up operations consistent with the more positive economic outlook.

The Q3 2010 Business Expectation Survey was conducted from July 1 to Aug. 10 and covered 1,632 firms nationwide. –Lawrence Agcaoili (The Philippine Star)