Consumer confidence rises in Q1 2010 and the next quarter
Following a slight dip in the last quarter of 2009, consumer sentiment improved in Q1 2010. The current quarter consumer confidence index (CI) rose to -27.6 percent from -36.0 percent in Q4 2009. Similarly, the CI for the next quarter (Q2 2010) improved to -4.8 percent from -10.5 percent in Q4 2009. This suggested that consumers were more optimistic that economic recovery is gaining more momentum and that the rebound could result in improved household finances. However, optimistic respondents continued to be outnumbered by the pessimists as the confidence index remained in the negative territory. The rise in consumer sentiment is in line with the trends observed in other countries such as Canada, Japan, UK, and Australia as the global economy emerges from the deepest contraction in post-war economic history.
The outlook for the next 12 months is more upbeat as the CI turned positive (at 5.1 percent) after being in the negative territory since Q2 2008. Consumers anticipate favorable domestic economic conditions with the completion of the national elections.
Improved consumer confidence was observed for all three indicators―economic condition of the country, family financial situation, and family income. More consumers expected that the economic condition of the country would be better and that this would bring about stable employment conditions, improved household finances and higher family savings. The same trend was seen with regard to the outlook for the next quarter.
Looking ahead to the next 12 months, consumers were bullish in their outlook on the country’s economic condition. For the first time since the start of the nationwide survey in Q1 2007, the optimists outnumbered the pessimists, with the CI reverting to positive territory at 1.1 percent from -16.1 percent in the previous quarter.
Consumer sentiment across all income groups is more favorable
The most notable improvement in the outlook was on the country’s economic condition. Compared to the previous quarter, respondents from all income groups anticipated that the economic condition of the country and their own family financial condition would improve in Q1 2010. Those belonging to the high-income group had the most favorable view about their family income and family financial situation. Meanwhile, the middle-income group registered the highest number of respondents that turned optimistic about the economic condition of the country in Q1 2010.
The buoyant outlook of respondents across all income groups was carried to the next quarter and the year ahead.
Household expenditures on basic goods and services are expected to increase in Q2 2010
More households expected that their expenditures on basic goods and services would go up in Q2 2010 partly due to the expected increase in prices and anticipated improvements in household income. Respondents nationwide expected to increase their expenditures in Q2 2010 on the following goods and services: food, electricity, fuel, transportation, education, and personal care and effects.
Buying conditions are more favorable in Q1 2010
Consistent with the more optimistic consumer sentiment, the percentage of respondents that considered the current quarter as a favorable time to buy big-ticket items increased compared to the previous quarter’s results.
Respondents attributed the improved buying conditions for big-ticket items for Q1 2010 to the increasing affordability of consumer durables and the improving climate to invest in house and/or lot on account of the prevailing low interest rate on housing loans and the expected appreciation of real estate properties.
Buying intentions for the next 12 months remain broadly steady
While the outlook on buying conditions for the next quarter was favorable, buying intentions for the next 12 months was relatively less sanguine. The percentage of respondents with intentions to purchase big-ticket items in the year ahead was broadly the same as in the previous quarter.
Selected Economic Indicators: Outlook for the next 12 months
Consumers have a more favorable view on the employment situation in the next 12 months as the number of respondents who expected an increase in the unemployment rate declined relative to the previous quarter’s survey results. On the other hand, more consumers expected that prices of goods and services would increase and that inflation would accelerate over the course of the next 12 months. This could develop as a result of the expected shortfall in the supply of agricultural products due to the El Niño phenomenon and the impending power rate adjustments. Meanwhile, a greater number of consumers anticipated that interest rates would rise given the expected higher inflation and that the peso would continue to depreciate against the US dollar in the year ahead.
Expenditures of Overseas Filipino Workers in Q4 2009
Of the 534 households with OFWs that received remittances in Q1 2010, 97.0 percent spent part of the remittances for food and other household needs, 69.5 percent used their remittances for education expenses, 56.7 percent for medical expenses, and 48.5 percent for debt payments. The percentage of OFW households that utilized remittances to purchase consumer durables and motor vehicles was broadly steady at 30.0 percent and 6.6 percent, respectively. Those that apportioned part of their remittances for amortization or full payment for houses purchased increased to 15.0 percent.
The percentage of households that allocated portions of their remittances to savings, which has been steadily increasing since Q2 2009, rose further to 50.4 percent, while those households using remittances for investment decreased to 5.8 percent.
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 beginning Q1 2007. For Q1 2010, the CES was conducted during the period 10-21 February 2010 with a total sample size of 5,496 households, of which 2,999 (54.5 percent) were from the NCR and 2,497 (45.5 percent) from the 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 Q1 2010 was 96.5 percent (from 95.5 percent in the last quarter’s survey).
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