Consumer confidence declines moderately
The impact of the global economic slowdown continued to weigh down on consumer sentiment, with consumer confidence declining moderately in Q2 2009 after registering an improvement in the first quarter. The overall confidence index (CI) stood at -34.2 percent, lower by 8.5 index points from Q1 2009 but higher by 9.6 index points from a year ago. The weaker consumer outlook in the current quarter was attributed by respondents to the softening labor market and lower family income due to the recessionary conditions in the global economy.
Respondents did not expect conditions to improve in the near term as the next quarter CI slid downward by 7.0 index points quarter-on-quarter to -13.2 percent, while the next 12 months index dropped to -7.6 percent from -2.3 percent in Q1 2009. However, consumers were more optimistic about the future compared to their outlook a year ago.
Consumers from the high income group are upbeat about their income and financial conditions
Consumer sentiments across income groups were mixed. Respondents belonging to the high income group appeared to be relatively less affected by the global economic slowdown as reflected in their positive CIs on family income (14.3 percent) and family financial situation (3.7 percent). This indicated that more respondents belonging to the high income group than otherwise expect their financial conditions to be better in the current quarter. The middle income group was most affected by the economic downturn as the CI on family income of this group reversed to the negative territory at -1.1 percent from 6.7 percent in Q1 2009, while the CI on family financial situation slid by 11.2 index points quarter-on-quarter to -16.0 percent. Meanwhile, the low income group’s CI on family financial situation, although remaining in negative territory, slightly improved by 0.4 index points quarter-on-quarter.
Compared to a year ago, all income groups registered more favorable consumer outlook on each of the three indicators―economic condition of the country, family financial situation, and family income.
Family expenditures are expected to rise in the next quarter
More households nationwide expected that their expenditures on basic goods and services would go up in Q3 2009. The CI for Q2 2009 increased by 3.7 index points quarter-on-quarter to 44.4 percent. The index, however, was lower by 13.5 index points year-on-year. Respondents attributed the higher expenditures to expectations of increases in the prices of basic goods and services during the next quarter.
Buying conditions are less favorable in Q2 2009
The percentage of respondents that considered Q2 2009 as a favorable time to buy big-ticket items decreased to 15.8 percent from 17.5 percent in Q1 2009. The decline was driven by the less favorable sentiments of AONCR respondents on buying conditions for consumer durables and housing. In contrast, more respondents from NCR saw an improvement in buying conditions for these items. Meanwhile, the buying condition for motor vehicles of both NCR and AONCR respondents remained steady at 11.5 percent in Q2 2009.
Among the reasons cited by respondents who considered buying conditions to be favorable in Q2 2009 were that these purchases are good investments and could also be used for business activities (in the case of motor vehicles).
Buying intentions to remain steady for the year ahead
The decline in the outlook on buying conditions for Q2 2009 appeared not to have affected households’ buying intentions for big-ticket items for the year ahead. The percentage of respondents that signified intentions to buy big-ticket items in the next 12 months was steady at 7.5 percent. The highest percentage of buying intention was for consumer durables at 9.8 percent, followed by housing at 7.4 percent, and motor vehicles at 5.3 percent.
Selected Economic Indicators: Outlook for the next 12 months
Consumers anticipated that the peso would continue to depreciate against the US dollar in the year ahead as the CI on the exchange rate in Q2 2009 further dropped to -21.8 percent from -10.8 percent in the previous quarter. The unemployment and interest rates were expected to rise, with CIs at 73.6 percent and 46.7 percent, respectively.
More consumers expected that the prices of basic goods and services would go up in the next 12 months, with a CI of 49.3 percent from 46.2 percent in the previous quarter. However, over the course of the next 12 months, respondents expect inflation to settle and stabilize at the rate of 8.7 percent. The stable inflation forecast of consumers could be attributed to the expected deceleration of food inflation which broadly offset the moderate rise in inflation for non-food items, such as, clothing, electricity, water, medical care, transportation, communication, and personal care.
Expenditures of Overseas Filipino Workers in Q2 2009
Out of the 575 OFW households surveyed, 96.2 percent of these households spent part of their remittances for food and other household needs, while 68.2 percent of the OFW households used their remittances for education expenses, and more than half (51.1 percent) allotted remittances for debt payments. The percentage of OFW households that utilized remittances to purchase consumer durables and motor vehicles both increased to 25.9 percent and 7.0 percent, respectively. A broadly steady percentage of OFW households at 10.8 percent apportioned part of their remittances to amortization or full payment for houses purchased. The percentage of households that allotted portions of remittances to savings dropped slightly to 38.3 percent, while the percentage that devoted a part to investment increased appreciably to 8.3 percent in Q2 2009.
About the survey
The Bangko Sentral ng Pilipinas started conducting the Consumer Expectations Survey (CES) in the National Capital Region in Q3 2004. The CES became a nationwide survey starting Q1 2007. For Q2 2009, the CES was conducted during the period 1-15 April 2009 with a total sample size of 5,909 households, of which 2,973 (50.3 percent) were from NCR and 2,936 (49.7 percent) from AONCR. The CES samples were drawn from the National Statistics Office’s (NSO) Master Sample List of Households, which is considered a representative sample of households nationwide. The said master sample was generated using a stratified multi-stage probability sampling scheme The nationwide total survey response rate for Q2 2009 was 96.1 percent (broadly similar to 96.4 percent in the last quarter’s survey).
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