More firms to expand in Q4 – BSP survey

MANILA, Philippines – More companies in the Philippines are planning to expand their operations and hire more workers in the fourth quarter of the year in anticipation of a strong domestic demand during the Christmas season, a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

Teresita Deveza, acting deputy director of the BSP’s Department of Economic Statistics (DES), said the Business Expectations Survey for the third quarter of 2011 showed the number of firms with expansion plans increase while employment outlook is more positive for the fourth quarter.

Deveza said the number of respondents that indicated expansion plans for the next quarter increased to 26.6 percent compared to a quarter-ago level of 24.7 percent.

“About one in every four respondent firms in the industry sector indicated expansion plans for the fourth quarter of 2011,” she added.

She pointed out that the mining and quarrying sector continued to record the highest expansion plans for the third consecutive quarter with 62.6 percent followed by electricity, gas, and water with 34.4 percent, agriculture with 31.7 percent, and the manufacturing sub-sector with 24.9 percent.

According to her, another indicator supporting expectations of higher growth in the fourth quarter was the increase in the employment outlook index across all sectors for the next quarter.

Data showed that the employment outlook index for the next quarter increased to 23.2 percent in the third quarter from 14.5 percent in the second quarter wherein the construction and services were the most optimistic in their employment outlook.

“This suggests that businesses anticipated that they will hire more compared to the previous quarter,” Deveza stressed.

The BSP survey showed that businesses’ outlook about their own operations were consistent with their views on the macroeconomy, as all sectors, except for the construction sector, turned more buoyant in the third quarter compared to the previous quarter’s survey.

The business confidence index on own operations by sector improved to 17.6 percent in the third quarter from 16.7 percent in the second quarter while the business outlook index on the macroeconomy for the fourth quarter increased to 47.9 percent from 34.9 percent.

It showed that the services sector had the most upbeat sentiment boosted by the financial intermediation sub-sector’s optimism on business conditions for the current and next quarters.

The wholesale and retail trade and industry sectors, on the other hand, likewise turned more optimistic due to the expected uptick in seasonal demand for production and business activities in fourth quarter.

The outlook on own operations of the construction sector remained high despite declining slightly, as firms expected demand for infrastructure projects under the public private partnership scheme of the Aquino administration to pick up.

“Their more positive outlook in fourth quarter was due to general expectations of the continued expansion of the economy on the back of stronger domestic demand, fuelled partly by the steady stream of overseas Filipinos’ remittances as well as brisker business during the Christmas and harvest seasons,” she explained.

She added that the prevailing sentiment of the survey respondents mirrored the more optimistic views of businesses in Thailand, Singapore and New Zealand and was in contrast to the weaker outlook in the US, Canada, and Germany.

The Cabinet-level Development Budget Coordination Committee (DBCC) sees the country’s GDP expanding between seven and eight percent this year but is now looking at between five and six percent due to weak global trade as well as the political tensions in the Middle East and North African (MENA) nations. -Lawrence Agcaoili (The Philippine Star)