Consumer confidence declines in Q1 2011
Overall consumer confidence declined in Q1 2011 after registering a big improvement in the fourth quarter of 2010. The confidence index (CI) weakened from -8.5 percent in Q4 2010 to -23.1 percent in Q1 2011, indicating that the number of pessimists increased during the quarter relative to the number of optimists. Households that responded to the survey, which was conducted between 14-21 March 2011, cited the continued increase in the prices of petroleum products, the high cost of goods and services and the rise in household expenses as the reasons behind their weaker outlook. The outlook was aggravated by the tensions in the Middle East and North Africa.
The lower current quarter outlook mirrored the weaker sentiment of consumers in the United States, United Kingdom, Thailand, and Japan due to high fuel prices, as well as in New Zealand and Australia which were hit by the recent natural calamities, as indicated in these countries' consumer sentiment surveys.
Consumer outlook on the country's economic condition, family income, and family finances decline
Consumer sentiment on all three indicators?economic condition of the country, family income, and family financial situation?dropped quarter-on-quarter, as more consumers expected these indicators to worsen compared to those who expected otherwise. According to respondents, their views about their family income and financial situation were dampened by the rising cost of basic commodities, expected high unemployment rate and low income.
Weaker consumer sentiment is observed across income groups
The perception of consumers across all income groups weakened for all three indicators in Q1 2011. The high-income group recorded the highest drop in sentiment about the economic condition of the country. For the near term and the next 12 months, the same weaker outlook was observed across all income groups for the three indicators.
Expenditures on basic goods and services are expected to rise in Q2 2011
More households expected that their expenditures on basic goods and services would go up in Q2 2011. Respondents nationwide anticipated an increase in their expenditures on all types of basic goods and services considering their expectations of a continued rise in fuel prices.
Buying conditions are seen to be less favorable in Q1 2011
Respondents were of the view that the current quarter is a favorable time to buy big-ticket items. However, the percentage of respondents who thought so declined compared to that of the previous quarter.
Consumers turn cautious in their buying intentions in the year ahead
Consistent with the decline in the buying conditions outlook for the current quarter, the number of respondents who intended to purchase big-ticket items in the next 12 months dropped in Q1 2011 compared to a quarter ago.
Selected Economic Indicators: Outlook for the next 12 months
Consumers expected interest and inflation rates to go up in the next 12 months as the continued rise in world oil prices is expected to put upward pressure on the prices of basic commodities. Respondents expected inflation to edge higher at 9.8 percent over the course of the next 12 months. Meanwhile, more consumers expected unemployment to rise due to returning OFWs from the Middle East and North Africa. They noted that these displaced workers would further add to the pool of employment seekers, together with new graduates entering the workforce. Respondents anticipated that the peso will depreciate against the dollar due to the possible reduction in OF remittances arising from the uncertainties brought about by the political tensions in the Middle East and North Africa region.
Expenditures of Overseas Filipino Workers in Q1 2011
The bulk of OFW households (98.0 percent) used remittances for food. More than seventy percent of the households (70.5 percent) allocated their remittances for education, 62.0 percent for medical payments and 48.4 percent for debt payments. The percentage of OFW households that utilized their remittances for savings went down slightly to 41.4 percent (from 43.7 percent in Q4 2010). Meanwhile, the percentage that apportioned part of their remittances to purchase consumer durables and houses and lots increased compared to the previous quarter's results. Use of OFW remittances for investments remained broadly steady at 5.7 percent in Q1 2011.
About the survey
The Bangko Sentral ng Pilipinas expanded the Consumer Expectations Survey (CES) into a nationwide survey beginning Q1 2007. Earlier, the survey was conducted only in the NCR (survey started in Q3 2004). 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. For Q1 2011, the CES was conducted during the period 14-21 March 2011 with a total sample size of 6,096 households, of which 3,064 (50.3 percent) were from the NCR and 3,032 (49.7 percent) from the AONCR. The nationwide total survey response rate for Q1 2011 was 97.1 percent (from 96.7 percent in the last quarter's survey).
The overall consumer confidence index is the average confidence index (CI) across 3 dimensions, namely, macroeconomic conditions - general economic condition of the country; family financial situation - status of family finances such as income, savings, outstanding debts, investments and assets; and family income - receipts from all sources received by all family members as participants in any economic activity or as recipients of transfers, pensions and grants.
The CI, which is computed for each of the 3 dimensions as well as for other indicators in the survey, is the percentage of respondents that answered in the affirmative less the percentage of respondents that answered negative for a given indicator. A positive CI indicates that respondents with favorable views outnumber those with unfavorable views, except for unemployment, change in prices and interest rate for borrowing money, where a positive CI indicates the opposite.
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