BUSINESSES in the Philippines turned more optimistic about the months ahead following improved sentiment in February, with firms citing stronger demand, seasonal factors and continued government spending as key growth drivers, according to the latest Business Expectation Survey (BES) of the Bangko Sentral ng Pilipinas (BSP).
The survey was conducted before the Middle East conflict, which has since driven up oil prices and disrupted supply chains.
The BSP reported that the three-month-ahead confidence index rose to 37.4 percent from 33.3 percent, while the year-ahead outlook surged to 51.1 percent from 38.6 percent — indicating a broad-based improvement in business expectations.
Firms expect firmer consumer demand during the summer season, supported by favorable weather conditions, increased public infrastructure spending and stable inflation. Over the next 12 months, businesses also anticipate stronger sales during peak and holiday periods, alongside improved productivity and investment prospects.
This improved outlook followed a rebound in current business sentiment in February, with the confidence index rising to 8.2 percent from 0.9 percent in January, reflecting more optimistic firms than pessimistic ones.
The uptick in February sentiment was driven by expectations of higher income and sales across sectors such as food and beverages, financial services, education, and construction, as well as better domestic economic conditions and sustained governance and infrastructure reforms.
Headwinds
Despite the more positive outlook, firms continued to face headwinds. Cash positions remained tight, though slightly improved, while access to credit became more constrained. Average capacity utilization in the industry and construction sectors also slipped to 67.2 percent from 69.6 percent, indicating some moderation in production activity.
Businesses cited stiff competition, insufficient demand and high interest rates as the main constraints to operations during the period.
Hiring intentions, however, improved, with the employment outlook index climbing to 27.2 percent for the next three months and 30 percent for the next 12 months, signaling stronger labor demand.
At the same time, expansion plans among industry firms declined, suggesting that while sentiment is improving, some companies remain cautious on capital investments.
Inflation expectations remained well-anchored within the central bank’s target range, while firms see the peso strengthening in the short term before weakening over the next year. Borrowing costs are expected to ease in the near term but rise over the longer horizon.
The February 2026 BES was conducted during the period Feb. 5-28. A total of 502 firms were surveyed nationwide, comprising 196 (39 percent) companies in the National Capital Region (NCR) and 306 (61 percent) firms in areas outside the NCR, covering all 18 regions across the country. / KOC