Consumer confidence remains steady in Q2 2011 and turns more optimistic in the year ahead
Overall consumer confidence was broadly steady in Q2 2011, with the confidence index (CI) decreasing slightly to -24.1 percent from -23.1 percent in Q1 2011. This means that the pessimists continued to outnumber the optimists but the margin was almost unchanged from that of a quarter ago. The current quarter outlook stemmed from the counterbalancing of the number of respondents that reported higher family incomes with those that indicated that they were negatively affected by the high cost of petroleum products and higher prices of goods and services. This outlook mirrored the steady sentiment of consumers in Germany, France, and New Zealand.
The broadly steady consumer sentiment in Q2 2011 was carried to the next quarter (CI at -7.8 percent from -6.2 percent a quarter ago). Consumers turned more bullish, however, in the year ahead (CI at 4.4 percent from 1.2 percent a quarter ago).
Consumer outlook on family finances and family income improves while sentiment on economic condition weakens
Consumers' perceptions on the three indicators-the country's economic condition, family financial situation and family income-were mixed in Q2 2011. The outlook on their family financial situation and family income slightly improved as more respondents cited that they anticipate additional incomes due to good harvest and more jobs available in Q2 2011. However, the continued increase in the prices of commodities dampened their sentiment on the economic condition of the country during the current quarter.
Consumer sentiment is mixed among income groups
Across income groups, respondents' views about the economic condition of the country weakened during the quarter. However, their sentiments on the family financial situation and family income were mixed. A greater number of respondents from the low- and high-income groups had more favorable perceptions about their family financial situation and family income than otherwise, while in the middle-income group, those having more optimistic views about their families' finances declined compared to the previous quarter's survey.
Household expenditures on basic goods and services are expected to rise in Q3 2011
More consumers expected higher expenditures on basic commodities in Q3 2011 compared to the previous quarter. Higher expenditures were expected primarily on transportation, fuel, personal care and effects, and education. This indicated that inflationary pressures could come from these goods and services.
Buying conditions are more favorable in the current quarter
Despite the continued increase in prices of commodities, more respondents considered the current quarter as a favorable time to buy big-ticket items. Consumers' outlook on buying conditions was most upbeat for real estate, followed by consumer durables and motor vehicles.
Buying intentions pick up in the year ahead
Consumers' sentiment on buying big-ticket items in the next 12 months likewise improved, reflecting their more buoyant outlook in the year ahead.
Selected Economic Indicators: Outlook for the next 12 months
Consumers expected interest and inflation rates to go up in the next 12 months. The inflation outlook of consumers could be attributed to the expected increase in fuel prices, which they anticipated would pull up the prices of basic commodities in the year ahead. Respondents expected inflation to increase to 10.4 percent in the next 12 months. Meanwhile, respondents expected unemployment to edge slightly lower over the next 12 months, with the index at 67.0 percent from 67.3 percent in the previous quarter. More respondents anticipated that the peso would depreciate against the dollar as the CI on the exchange rate dropped to -5.7 percent in Q2 2011 from -3.0 percent in the previous quarter.
Expenditures of Overseas Filipino Workers in Q2 2011
The bulk of OFW households (97.2 percent) used remittances for food. More than two-thirds of households surveyed (69.4 percent) allocated their remittances for education, 59.6 percent for medical payments and 46.4 percent for debt payments. The percentage of OFW households that utilized their remittances for savings went up to 44.0 percent (from 41.4 percent in Q1 2011). Meanwhile, the percentage that apportioned part of their remittances to purchase consumer durables, car/motor vehicles and houses and lots increased compared to the previous quarter's survey results. Likewise, the use of OFW remittances for investments increased to 6.8 percent from 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 Q2 2011, the CES was conducted during the period 18-30 April 2011 with a total sample size of 5,889 households, of which 3,044 (51.7 percent) were from the National Capital Region (NCR) and 2,845 (48.3 percent) from Areas Outside the NCR. The nationwide total survey response rate for Q2 2011 was 96.8 percent (from 97.1 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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