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Consumer Confidence Edges Higher in Q4 2012


Consumer confidence improves in Q4 2012

Consumer sentiment improved in Q4 2012 as the overall confidence index (CI) climbed to -10.4 percent in Q4 2012 from -13.3 percent in Q3 2012. This is the second highest reading since the nationwide survey started in Q1 2007. 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. The higher (but still negative) CI in Q4 2012 means that the number of households with an optimistic outlook increased but they continued to be outnumbered by those who think otherwise. Respondents cited the following factors for their improved sentiment: (a) more jobs as a result of more working family members, (b) additional income and higher salary, (c) increasing investment inflows, (d) improvements in infrastructure and (e) better governance.

Looking ahead, consumer expectations for the next quarter and the year ahead remained positive, with the CIs at 6.3 percent and 16.8 percent, respectively.  This indicates that the optimists continued to top the pessimists for the next quarter and the year ahead. Consumers are confident that improvements in the economy and family finances will be carried over to the next 12 months.

Consumers have more favorable outlook on the  economy in the current quarter and the year ahead

Consumer sentiment is measured across three component indicators, namely, the country’s economic condition, family financial situation and family income. Consumer confidence on the economic condition of the country improved significantly, with the index reaching -9.6 percent (the second highest reading since Q1 2007) in the current quarter from -17.4 percent in Q3 2012.

Looking ahead, consumer expectations for the next quarter and the year ahead remained positive, with the CIs at 6.3 percent and 16.8 percent, respectively.

The outlook of the low-income group on the economic condition of the country improves

The more favorable outlook on the economic condition of the country was largely driven by the sentiment of the low-income group which recorded the biggest improvement in outlook in Q4 2012 across income groups. In terms of family finances, the sentiment across income groups remained steady. Consumers' views about their family income were also broadly steady for the low-income group  but less optimistic for the middle- and high-income groups.

Spending outlook on basic goods and services is lower in Q1 2013 due to lower inflation expectations

Fewer households expected their expenditures on basic goods and services to go up in Q1 2013 compared to the last quarter’s survey. The spending outlook was lower for all basic goods and services, except for fuel, water and transportation.

Buying conditions for big-ticket items are less favorable in Q4 2012

Fewer respondents considered the current quarter as a favorable time to buy big-ticket items as the number of respondents with positive outlook declined compared to the previous quarter’s survey.

Buying intentions in the next 12 months remain steady

Buying intentions for the year ahead remained broadly steady for all big-ticket items. The highest buying intention was for consumer durables, followed by real property (house and lot) and motor vehicles.

Consumer perception on key economic indicators—employment, inflation, interest and exchange rates— improves for the year ahead

Consumers had a more favorable view on the employment situation as the unemployment rate index dropped to 40.7 percent from 46.8 percent in Q3 2012. This indicated that the number of respondents that expected the unemployment rate to go up declined compared to the previous quarter. Likewise, fewer respondents expected interest rates and prices to go up in the next 12 months. Respondents anticipated inflation to decline to   7.0 percent from 7.5 percent in Q3 2012, reflecting their outlook of more stable prices for the next quarter and the year ahead. These are consistent with the declining trend in inflation figures for Q4 2012 relative to Q3 2012. Meanwhile, consumers anticipated that the peso would continue to appreciate against the US dollar in the year ahead in line with expectations of continued strong inflows of foreign exchange from foreign direct and portfolio investments, overseas Filipino remittances and business process outsourcing services.

OFW households utilize their remittances primarily for food, education, medical expenses, and debt payments in  Q4 2012

Of the 478 households that received OFW remittances in Q4 2012,  95.4 percent used remittances for food. Almost seventy percent of the households (68.8 percent) surveyed allocated their remittances for education, 65.5 percent for medical payments and 44.1 percent for debt payments. The percentage of OFW households that utilized their remittances for savings increased to 39.5 percent (from 36.8 percent in Q3 2012) while those that apportioned part of their remittances for investment (i.e., business capital or stocks) declined to 3.1 percent (from 4.9 percent in  Q3 2012 survey). Likewise, the percentage that utilized part of their remittances to purchase consumer durables, houses and lots, and motor vehicles decreased compared to the previous quarter’s results.

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  Q4 2012, the CES was conducted during the period 1-12 October 2012 with a total sample size of  5,789 households, of which 2,961 (51.1 percent) were from the NCR and  2,828   (48.9 percent) from the AONCR.

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