Nationwide consumer confidence is bearish
Consumer confidence slid in Q3 2008 on worries about the economy and inflation. The overall consumer confidence index (CI) dropped to -52.8 percent, down by 9.0 index points quarter-on-quarter and by 29.2 index points year-on-year. The negative index indicated that more consumers expected that conditions could worsen in Q3 2008.
BSP Governor Amando M. Tetangco, Jr. clarified that while remaining negative, the outlook of consumers for the quarter ahead is more favorable as the CI gained 1.8 index points in Q3 2008 at -25.1 percent from -26.9 percent in Q2 2008. By contrast, this quarter’s outlook for the year ahead is less favorable at -23.9 percent relative to the year-ahead outlook last Q2 2008 at -20.3 percent.
The consumer confidence index on the country’s economic condition fell the most at -81.2 percent, down by 8.2 index points quarter-on-quarter and by 45.1 index points year-on-year. With fewer consumers expecting improvements in their family income, the CI on family income and family financial situation both declined to -25.8 percent and -51.5 percent respectively, from their comparative levels in Q2 2008 and Q3 2007. The lower indices on family financial situation were registered across all income groups.
Among the reasons cited for the weaker outlook were the rising prices of fuel and basic commodities, the anticipated increase in the number of the unemployed, and reduced household income.
Consumers from the high income group remained broadly optimistic about their family income in Q3 2008 although the number of optimistic respondents from this group contracted as the family income index declined to 7.3 percent from 13.8 percent in Q2 2008. Meanwhile, the confidence of low and middle income households slumped further with the continuing rise in the prices of basic goods and services.
Consumer outlook in NCR and AONCR weakens
The consumer sentiment of respondents in both the National Capital Region (NCR) and Areas Outside NCR (AONCR) turned more bearish in Q3 2008. The drop in all the three indices (economic condition, family financial situation and family income) in both NCR and AONCR led to the weaker overall outlook.
Expenditures for next 3 months to rise
Against expected increase in prices, consumers anticipated that expenditures on basic goods and services would increase for the quarter ahead as the index remained positive at 56.9 percent, albeit lower than in Q2 2008. Households expected an acceleration of expenditures particularly on food, transportation and fuel—items which have recently registered sharp price movements. Meanwhile, respondents anticipated that the burden of adjustments will be borne by other expenditure items, specifically, clothing and footwear and communication—items that may be considered relatively non-essential— as well as education and medical care.
Buying conditions for the next 3 months are less favorable
Buying conditions have continued to decline since Q1 2008. Only 11.4 percent of households considered it a good time to buy big-ticket items in Q3 2008. This was lower compared to 14.7 percent last quarter and 21.0 percent last year.
The number of respondents who considered it timely to buy a house and/or lot in Q3 2008 declined to 16.9 percent from 21.2 percent in Q2 2008 and 27.3 percent a year ago. Likewise, rising prices also dampened the buying conditions for motor vehicles and other consumer durables.
Consumer buying intentions for the year ahead dip
Consistent with the less favorable expectations on family income over the one year horizon, the percentage of households who intended to buy big-ticket items for the year ahead declined to 6.0 percent from 7.9 percent in Q2 2008 and 13.6 percent a year ago. By commodity, buying intentions for consumer durables was slightly higher at 8.3 percent compared to purchase of vehicle (3.7 percent) and house and/or lot (5.9 percent).
Selected Economic Indicators: Outlook for the next 12 months
Given the expected downturn in the growth of the domestic economy, more consumers in Q3 2008 anticipated that the peso would depreciate against the US dollar for the year ahead. Respondents also expected that the unemployment rate and interest rates would continue to rise. Moreover, consumers expected that prices of basic goods and services would go up.
Expenditures of Overseas Filipino Workers for Q3 2008
Most OFW households spent their remittances primarily on food and other household needs, education, medical expenses, and debt payments. The percentage of households that allotted portions of remittances to savings remained high at 30.4 percent, while that for investments increased to 7.4 percent in Q3 2008. In contrast, the number of households who utilized their remittances for house purchases declined to 12.4 percent.
About the survey
The Q3 2008 CES was conducted during the period 1-15 July 2008 with a sample size of 2,990 households (54.6 percent) in NCR and 2,482 households (45.4 percent) in AONCR for a total of 5,472 households nationwide. The households interviewed were drawn from the National Statistics Office’s (NSO) Master Sample List of Households, which is considered a representative sample of households nationwide. The total survey response rate nationwide for Q3 2008 was 96.3 percent which was higher than 95.0 percent in the last survey.
For inquiries, please contact the Department of Economic Statistics
Read Full Report