Jobs growth slow amid business optimism


A BETTER Christmas this year; but with a fewer number of employed people.
That’s what economist Victor Abola predicted on Thursday, as he presented the Dun&Bradstreet Inc. business optimism index (BOI) showing a positive outlook for the fourth quarter by 260 companies.

Abola’s holiday cheer is shared by those in the construction and retail sectors that continue to push up volume of sales, net profits and new profits.

Overall BOI for the fourth quarter this year is up six points to 70 percent, according to the D&B survey done mid-September in the midst of a sharp drop in 10-year T-bond yields and strengthening peso.

“The growth is coming from volume of sales in the retail sector as Christmas nears and spending is expected to increase. Expect corporate giving to also increase,” Abola said on Thursday.

The BOI in net profits is also up 13 points to 63 percent; ditto with new orders at 33 percent (up four points).

Personally, Abola said, he “expects robust growth [in gross domestic product] above 6 percent in the third and fourth quarters.”

However, the growth has remained fallow in terms of jobs, as six of eight sectors covered expect slower job creation by nine points lower in the fourth quarter. Only the construction and retail sectors expect employment to increase.

Abola said this may be explained by the continuous activities in the construction sector as developers “continue to build subdivisions and condominiums.”
Likewise, the retail sector, having posted a decline in inventory on higher Christmas sales, will need to hire and is expected to hire temporary workers.

The biggest declines in jobs growth expectations level are in the transport, communications and utilities sector and the services sector, which include business-process outsourcing (BPO) companies.

Other sectors that expect slower job creation this quarter include manufacturers of durables; manufacturers of consumables; wholesalers; and, finance, insurance, and real estate.
“They’re not hiring people at the same pace as in the third quarter but at a reasonable rate,” Abola said.

He stressed the rising optimism of the electronics sector despite the strengthening of the peso. Abola credited this to the increased volume of sales rather than the strategy of hedging against the weakening greenback.

“Peza [Philippine Export Zone Authority] firms now have a brighter outlook than all firms in general.”

Abola also noted that the country’s exports is expected to lead growth “and continue to be robust. But the main explanation is not the United States.” He noted that the country’s exports by destination is now the East Asia and Asean bloc, forming 51.70 percent of trade.

The US is now just a little above the euro zone as a destination of Philippine exports, accounting for 16 percent and 15.20 percent, respectively.

Japan, also a traditional importer of Philippine products, has a 12.7-percent share of the exports pie.

Combined, however, these countries form less than 45 percent as a destination, Abola noted.

He expects a strong peso to continue to negatively affect exports, remittances of overseas Filipino workers, and BPOs.

It also has a bad effect on tax collections, he added. Abola said based on his computation, for every peso increase in the currency’s value on an annual average, the government loses P15 billion on tax revenue. –Dennis D. Estopace / Reporter, Businessmirror