Phl firms in expansion, hiring mode – BSP

MANILA, Philippines –  A survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed companies are still planning to expand their operations and hire more workers this year despite the projected easing in economic growth.

The BSP’s Department of Economic Statistics director Rosabel Guerrero said one of every four respondents of the Business Expectations Survey (BES) for the second quarter of 2011 indicated plans to expand their operations.

“About one for every four respondents in the industry sector or 24.7 percent indicated expansion plans for the third quarter,” Guerrero stressed.

However, she explained that the percentage of respondents that signified their intention to expand their operations went down to 24.7 percent in the second quarter from 33.9 percent in the first quarter.

Guerrero revealed that expansion plans were noted across all sub-sectors, wherein mining and quarrying continued to record the highest expansion plans with 41.8 percent in the second quarter, but lower than the 47.3 percent in the first quarter.

“Mining and quarrying continued to record the highest expansion plans,” she said.

Agriculture, fishery and forestry followed with 24.3 percent; the manufacturing sub-sector with 24.2 percent; and electricity, gas and water with 23.8 percent.

She also reported the respondents reported a slightly lower average capacity utilization of 75.1 percent in the second quarter of the year from 75.3 percent in the first quarter.

The BSP official added that the results of the survey were consistent with the Monthly Integrated Survey of Selected Industries (MISSI) of the National Statistics Office (NSO).

In terms of employment outlook index of the survey, Guerrero said the number of respondents who expected to continue hiring in the third quarter declined to 14.5 percent in the second quarter from 23 percent in the first quarter.

“Another indicator supporting expectations of sustained growth in 2011 was the employment outlook index for the next quarter, which indicated that firms across all sectors expected to continue hiring in the third quarter, but the number of respondents who said so declined,” she said.

Furthermore, Guerrero added that business constraints identified by the respondents of the survey include competition, weak demand leading to low sales volume, and financial problems.

“Competition, weak demand, and financial problems remain the major risks to business,” she noted.

The Philippines posted its strongest economic growth in 34 years after its gross domestic product (GDP) surged 7.6 percent last year, exceeding the revised growth target of 5-6 percent.

The Philippines barely escaped recession after its GDP growth slackened to 1.1 percent in 2009 from 3.8 percent in 2008 due to the full impact of the global financial crisis.

BSP Governor Amando Tetangco Jr. said the country’s economic growth would be slower than expected this year due to the political tensions in the Middle East and North African (MENA) states as well as the disasters that struck Japan last March.

The Cabinet-level Development Budget Coordination Committee (DBCC) sees the country’s GDP expanding by 7-8 percent this year.

“We think the economy will continue to grow this year. The government is projecting seven percent to eight percent although that projection was arrived at prior to the events at the MENA region as well as the earthquake, the tsunami and the nuclear disaster in Japan,” Tetangco stressed.

He pointed out that the crisis in the MENA region and the disasters in Japan would have a negative impact on global growth in the short term.

“We may be affected by that and therefore we should not be surprised if the growth rate for this year turns out to be lower than the seven percent to eight percent target,” he added.

The BSP chief explained that the rebuilding and reconstruction process in Japan would have a positive impact on global economic growth.

“In the medium to long term, the expectation is that because of the rebuilding and the reconstruction that will have to be done by Japan that will have a positive impact on economic growth. So the negative impact is expected to be short term or temporary and in the longer term it will be positive,” Tetangco said. –Lawrence Agcaoili (The Philippine Star)