CONSUMER sentiment weakened for the second quarter of 2015 as the overall confidence index (CI) fell to -16.2 percent from -10 percent for the first quarter of the year, the Bangko Sentral ng Pilipinas’ quarterly Consumer Expectations Survey showed. This indicates that the number of pessimists increased and continued to exceed the number of optimists for the second quarter.
The bearish outlook during the quarter was because of anticipated higher prices of commodities due to an increase in domestic oil prices, power rate hike and higher tuition, leading to higher household expenses; expected increase in the number of unemployed as new graduates enter the labor force; and perceived graft and corruption in government.
Respondents also cited their concerns on the peace and order following the death of 44 members of the Special Action Force and the political issues behind it, occurrence of calamities such as fire, typhoons and floods, as well as the impact of the El Niño dry spell on agricultural output as reasons behind their weaker outlook.
The less favorable consumer sentiment was carried to the next quarter as the CI reverted to negative territory at -0.4 percent for Q2 2015 from 4.4 percent for Q1 2015. Consumers attributed their less optimistic outlook to concerns over the perceived graft and corruption in the government and expected occurrences of typhoons and other calamities as well as the effects of El Niño.
Meanwhile, consumer confidence for the next 12 months remained broadly steady at 16.4 percent from 17.3 percent in the previous quarter’s survey.
The quarter-on-quarter decline in confidence was broadly observed across the three component indicators of consumer confidence—the country’s economic condition, family financial situation, and family income. Respondents’ outlook was lowest on the economic condition of the country, followed by family financial situation, and family income.
The more pessimistic view of respondents on the current condition of the economy was largely behind their lower consumer confidence for Q2 2015.
Consumers’ outlook on the economic condition of the country was weighed down by concerns over expectations of higher prices of goods and unemployment. Meanwhile, the outlook on family income as well as on family financial situation was more buoyant for the year ahead as respondents anticipated increases in family income due to higher salary and better harvest.
The less sanguine consumer outlook for the current and next quarters was more evident among respondents in the low and middle-income groups, as their optimism declined across all indicators of consumer confidence. Respondents in the high-income group likewise had a weaker outlook on the country’s economic condition but they expected an improvement in their family finances and income. For the next 12 months, consumer confidence declined for the low-income group but remained steady for the middle- and high-income groups.
As respondents anticipated higher prices of basic commodities, the spending outlook on basic goods and services for the next quarter went up, with the CI at 32.2 percent (from 30 percent in the previous quarter). The spending outlook index rose across commodity groups, except for electricity, and personal care and effects, which remained broadly steady. The biggest increases were observed for fuel, transportation, education, and restaurants and cafes.
The percentage of households that considered the current quarter as a favorable time to buy big-ticket items increased to 30.3 percent (from 28.4 percent).
The more favorable outlook on buying conditions was due primarily to the improved outlook on buying conditions for real estate. The three big-ticket items posted all-time high indices since the start of the nationwide survey in Q1 2007. Buying intentions of respondents for big-ticket items for the year ahead improved, with the index increasing to 12.6 percent from 11.6 percent a quarter ago. Buying intentions for real estate and motor vehicles improved while buying intentions for consumer durables remained broadly steady.
Households with savings reached an all-time high of 33.9 percent from 31.6 percent in the previous quarter. The proportion of households with savings increased across all income groups, with the high-income group posting the highest increment quarter-on-quarter, consistent with their more optimistic outlook on family finances and income during the current quarter.
According to respondents, they save money for emergencies, education, health and hospitalization, retirement, and business capital and investment. More than two-thirds (68.8 percent) of household savers had bank deposit accounts while 38.3 percent kept their savings at home and 22.6 percent put their money in cooperatives, paluwagan, other credit/loan associations and as investments. (BSP)