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Consumer Confidence is Generally Steady in Q1 2013; Quarter of Households Able to Save


Consumer confidence is steady in Q1 2013

Overall consumer outlook was broadly steady in Q1 2013, with the confidence index (CI) slightly declining to -11.2 percent from -10.4 percent in Q4 2012. However, the current quarter consumer confidence, while remaining negative, was the third highest reading since the nationwide survey started in Q1 2007. This indicates that the pessimists continued to outnumber the optimists, but the margin increased very modestly and remained narrow. 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 factors as reasons for their steady outlook: a) more jobs available, b) increasing investment inflows, c) stable prices of goods, and d) expected increase in salary. Despite these favorable macroeconomic and family financial conditions, consumer confidence for the current quarter was weighed down by the damage caused by typhoon Pablo to infrastructure, agriculture and private property in Mindanao, which was estimated at about  P15.1 billion.

Looking ahead, consumer expectations for the next quarter and the year ahead turned bullish, with the CIs at 7.8 percent and 18.5 percent, respectively (also the third highest reading since Q1 2007). These indicate that the optimists increased and continued to outnumber the pessimists for the next quarter and the year ahead.

Consumer sentiment on the economic condition of the country and family income declines, while the outlook on family financial situation improves

Consumer sentiment across three component indicators, namely, the country’s economic condition, family financial situation and family income was mixed. The outlook on the family financial situation improved as respondents continued to expect more working family members, lower household expenses, family savings and lesser debt payments.

For the next quarter and the year ahead, the outlook on family financial situation and family income registered more favorable readings. Higher expectations of additional income and more working family members supported respondents’ optimistic outlook for the year ahead.

The outlook of the middle-income group improves in all indicators of consumer sentiment

In the current quarter, the outlook of the middle-income group was more upbeat in all three indicators of consumer confidence. The high- and low-income groups registered mixed outlook across the three indicators.

Spending outlook on basic goods and services is broadly steady in Q2 2013

The spending outlook on basic goods and services was broadly steady in Q2 2013 compared to the previous quarter’s survey. In particular, respondents expected to spend less for food, clothing and footwear, medical care, fuel and transportation, but they anticipated to spend more for utilities such as water and electricity, communication, and restaurants and cafés. The spending outlook was steady for house rent, education and personal care and effects compared to a quarter ago.

Buying conditions for big-ticket items are more favorable in Q1 2013

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 in the next 12 months remain steady

Buying intentions for the year ahead were broadly steady for all big-ticket items, with the highest buying intention registered for consumer durables.

About 1 in 4 households have family savings

Survey results showed that 24.5 percent of households had savings. Respondents indicated that they were saving money for the following reasons:  education, emergency/contingency fund, hospitalization and business capital. A bigger percentage of respondents in the NCR reported having family savings (35 percent) compared to those in AONCR (22.8 percent). By income group, more than half of the households with savings belonged to the high-income group (57.1 percent), followed by the middle-income (33.2 percent) and the low-income groups (14.8 percent).

Two in three households with savings have deposit accounts

Among those respondents with savings, about 2 in 3 had bank deposit accounts, 4 in 10 respondents kept their savings at home, while less than 10 percent put their money in cooperatives, paluwagan and other credit/loan associations.

Looking at saving preferences by income group, the bulk of savers in the low-income group (78.7 percent) kept their savings at home, while only about forty percent (39.1 percent) had bank deposits. In contrast, a big majority of the savers in the middle- and high-income groups (74.1 percent and 85 percent, respectively) saved their money in banks and only a minority kept their savings at home (37.4 percent and 16.3 percent, respectively).

Three in ten respondents said they could save money during the current quarter

Three in ten respondents (31.6 percent) said they could save money during the quarter. Among these respondents, 6 out of 10 could save less than 10 percent of their income, 3 in 10 could save 10 to 19 percent and only 1 in 10 could save 20 percent and over from their monthly income. More than half (56.3 percent) of respondents from the high-income group could set aside money for savings in the current quarter, followed by respondents from the middle-income (40.6 percent) and the low-income groups (23.2 percent).

Consumers expect inflation and interest rates to go up and the peso to appreciate in the year ahead

Consumers expected that the employment situation would remain stable in the year ahead as the unemployment rate index was broadly unchanged in Q1 2013 at 40.9 percent compared to 40.7 percent in Q4 2012. Meanwhile, respondents anticipated inflation to increase to 7.9 percent in Q1 2013 from 7 percent in the previous quarter as more respondents expected prices to go up compared to the previous quarter’s survey results. Their views mirrored the increasing trend in the inflation readings in January and February 2013.  Likewise, more respondents expected interest rates to go up in the next 12 months. Meanwhile, more consumers anticipated that the peso would continue to appreciate against the US dollar in the year ahead in line with expectations of continued stronger foreign investments, sustained overseas Filipino (OF) remittances and higher receipts from business process outsourcing services.

OFW households utilize their remittances primarily for food, education, medical expenses, and savings in Q1 2013

Of the 464 households that received OFW remittances in Q1 2013,   96.6 percent used remittances for food. More than two-thirds of the households (67.2 percent) surveyed allocated their remittances for education, 59.1 percent for medical payments and 42.2 percent for debt payments. The percentage of OFW households that utilized their remittances for savings increased to 42.5 percent (from 39.5 percent in Q4 2012). Likewise, those that apportioned part of their remittances for investment (i.e., business capital or stocks) increased to 5.8 percent (from 3.1 percent in Q4 2012), and those that utilized these remittances to purchase consumer durables and motor vehicles went up 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 Q1 2013, the CES was conducted during the period 21 January – 3 February 2013 with a total sample size of 5,670 households, of which 2,751 (48.5 percent) were from the NCR and 2,919 (51.5 percent) from the AONCR.

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