BUSINESS sentiment improved in June as firms turned neutral after two months of pessimism, buoyed by stronger consumer spending at the start of the academic year and lower oil and energy costs, according to the Bangko Sentral ng Pilipinas (BSP).
The BSP’s June 2026 Business Expectations Survey showed the overall business confidence index (CI) for the current month rose to 0.0 from -25.2 in May, indicating that the number of optimistic firms was nearly equal to those with a pessimistic outlook. A positive index means optimists outnumber pessimists, while a zero reading indicates a neutral sentiment.
The central bank said 61.8 percent of firms with a more favorable outlook cited higher consumer spending as the new school year began, while 11.8 percent pointed to lower oil prices and energy costs.
Businesses also expressed greater optimism over the next three months, with the confidence index rising to 18.8 in June from 0.6 in May, driven by expectations of stronger household consumption and easing inflation pressures.
The 12-month outlook likewise improved, with the confidence index increasing to 42.4 from 27.8, supported by expectations of stronger consumer demand, a possible resolution of the Middle East conflict, and improved domestic and global economic conditions.
Operational indicators also improved during the month. Firms reported higher business activity and order volumes, while average capacity utilization in the industry and construction sectors rose to 73.9 percent from 70.5 percent in May.
Access to credit became less restrictive, although firms said their financial conditions remained tight. The top constraints cited were stiff domestic competition, insufficient demand and financial problems.
Outlook in 2027
Looking ahead, businesses expect hiring and expansion to continue over the next 12 months.
The employment outlook remained favorable, while the share of firms planning to expand operations increased, suggesting business activity could continue supporting economic growth in 2027.
Despite the improved outlook, firms continued to expect elevated inflation. Businesses projected year-ahead inflation at 5.6 percent, lower than 5.9 percent in May but still above the BSP’s four percent ceiling. Respondents expecting faster inflation cited higher energy costs and supply constraints, the ongoing Middle East conflict, and peso depreciation as key risks.
The survey also showed businesses generally expect inflation and peso borrowing rates to increase over the current, three-month and 12-month horizons. They expect the peso to depreciate against the US dollar in the current month but appreciate over the next three months and in the next year.
The BSP surveyed from June 5 to 30, 2026, among 515 firms nationwide, with a response rate of 48.3 percent and a margin of error of ±6.1 percent. / KOC