Consumer confidence index declines in Q2 2012
Consumer sentiment weakened in Q2 2012 as the overall confidence index (CI) declined to -19.5 percent from -14.7 percent in Q1 2012. This means that the pessimists continued to outnumber the optimists in Q2 2012. The CI is computed as the percentage of households that answered in the affirmative less the percentage of households that answered in the negative with respect to their views on a given indicator. Respondents cited the following reasons for their bearish outlook during the current quarter: (a) perceived high cost of goods and services; (b) rising unemployment; (c) low salary and income; and (d) expected higher household expenditures. The weaker consumer sentiment was carried to the next quarter as the CI reverted to the negative territory at -2.4 percent in Q2 2012 from 2.8 percent in Q1 2012. The next quarter CI, however, was better than its year ago level of -7.8 percent.
Concerns over the increase in transport fares in March, the expected upward adjustments in power rates (which took effect in May), and the anticipated hike in tuition fees could have driven households’ lower optimism as these factors put additional strain on family finances, pushing household expenditures up and real income down. Households also anticipate tougher competition for jobs as the new college and high school graduates join the labor force during the quarter.
In the year ahead, consumer confidence remained positive but less optimistic, as the CI declined slightly to 10 percent from 11.9 percent in Q1 2012.
Consumer sentiment on the economy, family finances and income dip in Q2 2012
The quarter-on-quarter decline in confidence was observed across the three component indicators of consumer confidence—the country’s economic condition, family financial situation, and family income. Respondents’ outlook was lowest on the economic condition of the country, followed by family financial situation, and family income.
Weaker consumer sentiment observed across income groups
The less favorable outlook during the quarter was noted across income groups. The low-income group turned more pessimistic on all three component indicators. The middle-income group recorded the highest drop in sentiment about the economic condition of the country but remained upbeat on family income. The sentiment of the high-income group likewise declined on the country’s economic condition while remaining optimistic on their family income and financial situation.
Spending on basic goods and services expected to increase in Q3 2012
More households expected to spend more on basic goods and services in Q3 2012 compared to the previous quarter’s survey results. Notably, the biggest increases in spending outlook were for education, clothing and footwear, transportation, and communication due partly to the school opening in June. The spending outlook for food, house rent, and water remained broadly steady while those for electricity, fuel, medical care, personal effects and hotel and restaurants increased moderately.
Buying conditions for big ticket items are seen to be favorable in Q2 2012
Despite the weaker current quarter sentiment, respondents’ outlook on buying conditions for big-ticket items continued to be favorable during the quarter. The outlook on buying conditions was most upbeat for real estate, followed by consumer durables and motor vehicles. Respondents’ views were driven by the following considerations: (a) that real property is a good investment; (b) consumer durables offer family convenience; and (c) motor vehicles can be used for business and personal purposes. This outlook was reflected in increased consumer confidence on buying intentions for big-ticket items in the next 12 months.
Respondents expect inflation and unemployment to rise in the year ahead
Respondents expected inflation to increase to 8.8 percent from 8.3 percent in the Q1 2012 survey, reflecting expectations of higher prices in the year ahead due to concerns of continuing tensions in the Middle East and the expected upward adjustments in power rates. Meanwhile, the outlook on interest rates was broadly steady.
More respondents expected unemployment to rise over the next 12 months as the index increased to 60.2 percent from 52.8 percent in the last quarter’s survey. Meanwhile, respondents expected that the peso would continue to depreciate but the number that said so declined compared to the previous quarter.
Number of OFW households using remittances more for food, education and savings rise in Q2 2012
Of the 544 households that received Overseas Filipino Workers’ (OFW) remittances in Q2 2012, 95 percent used remittances for food. The percentage of OFW households that utilized their remittances for education increased to 67.7 percent (from 66.1 percent in Q2 2011). Likewise, the percentage that apportioned part of their remittances to savings went up (to 44.5 percent from 42.7 percent) compared to the previous quarter’s results. More than fifty percent of the households (57.8 percent) surveyed allocated part of their remittances for medical payments and 44.1 percent for debt payments. The percentage of households that apportioned part of their remittances to purchase house and lot, consumer durables and motor vehicles decreased compared to the Q1 2012 results. Likewise, those that apportioned part of their remittances for investment dropped quarter-on-quarter (from 8.5 percent to 5.0 percent).
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 2012, the CES was conducted during the period 2 – 16 April 2012 in all regions of the Philippines, except for ARMM, with a total sample size of 5,830 households, of which 2,955 (50.7 percent) were from the NCR and 2,875 (49.3 percent) from the AONCR.
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