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Consumer Confidence Hits All-Time High in Q2 2013


Consumer optimism posts highest reading in Q2 2013

Consumer sentiment was quite upbeat in Q2 2013 as the overall confidence index (CI) climbed to -5.7 percent from -11.2 percent in Q1 2013. This was the highest reading since the nationwide survey started in Q1 2007. The still negative CI indicates that the pessimists continued to outnumber the optimists but the margin has decreased to its lowest ever. Respondents attributed their favorable outlook to expectations of: a) better job opportunities, b) increased investment inflows that would support job creation, and c) salary increases. Consumers also cited the country’s strong macroeconomic fundamentals (i.e., low inflation environment, stable peso-dollar exchange rate and growth in overseas Filipino (OF) remittances), and the investment grade credit rating by Fitch Ratings as factors that contributed to their more bullish outlook.

For the next quarter and the year ahead, consumer sentiment continued to be optimistic as the CIs remained positive although lower at 4.1 percent and 16.1 percent, respectively, compared to the previous quarter’s survey results.

Consumer confidence on the economy and family finances rise to their highest levels

Consumers’ views on the three indicators of confidence–economic condition of the country, family financial situation and family income–improved in Q2 2013. Notably, consumer perceptions on the economic condition of the country (-4.4 percent) and family financial situation (-9.6 percent) were at record highs, while their outlook on family income was at its second highest reading.

Consumer outlook on the country’s economic condition was broadly steady for the next quarter but more buoyant in the year ahead as respondents expected to benefit from sustained investments in infrastructure and social services as well as from policy pronouncements of recently elected national and local government officials on employment generation. Meanwhile, the outlook on family finances weakened in the near term and the year ahead due to the anticipated increase in education expenses of households and slowdown in economic activity during the rainy season.

Outlook improves across income groups

In the current quarter, the outlook on the three indicators of consumer confidence improved across income groups, with the high-income group being the most optimistic.

Spending outlook on basic goods and services is broadly steady in Q3 2013

The spending outlook on basic goods and services was broadly steady at 39.5 percent in Q3 2013 compared to the previous quarter’s survey. In particular, the spending outlook was steady for water, transportation, communication and restaurants.

Buying conditions for big-ticket items are more favorable in Q2 2013

More respondents considered the current quarter as a favorable time to buy big-ticket items. The outlook was most upbeat for buying real property, 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.

Households with savings decline in Q2 2013

Survey results showed that 22.4 percent of households had savings, lower than the 24.5 percent recorded in the previous quarter. The percentage of households with savings declined among respondents from the low- and middle-income groups, outweighing the increase in savers from the high-income group. The decrease in the number of savers may be attributed to the expected increase in education expenditures.

Respondents indicated that they were saving money for the following reasons: education, emergency/contingency fund, hospitalization and business capital. By geographical location, more respondents in the NCR reported having households savings (25.6 percent) compared to those in AONCR (21.9 percent).

Two-thirds of households with savings have deposit accounts

Among those respondents with savings, about 64 percent had bank deposit accounts, 23.6 percent kept their savings at home, while 11.3 percent put their money in cooperatives, paluwagan and other credit/loan associations.

About 32 percent of respondents expect to save money during the current quarter

The percentage of respondents that expect to save money in Q2 2013 remained steady at 31.9 percent compared to the previous quarter’s survey. The expected savings rate of respondents was also unchanged from a quarter ago at 10 percent of their household income.

Consumers expect unemployment, inflation and interest rates to go down and the peso to appreciate in the year ahead

Consumers had more favorable views on the employment situation as the unemployment rate index declined in   Q2 2013. This indicates that fewer respondents expected an increase in the unemployment rate. Likewise, the interest rate index declined for this quarter’s survey. Meanwhile, inflation expectations declined slightly at  7.5 percent in Q2 2013 from 7.9 percent in   Q1 2013, reflecting consumers’ expectations of stable prices for the year ahead. More consumers anticipated that the peso would continue to appreciate against the US dollar in the next 12 months in line with expectations of continued inflows of 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 debt payments in Q2 2013

Of the 525 households included in the survey that received OFW remittances in Q2 2013, 95.4 percent used remittances for food, 67 percent for education, 54.9 percent for medical payments and 42.1 percent for debt payments. The percentage of OFW households that utilized their remittances for savings decreased slightly to  39.4 percent (from 42.5 percent in Q1 2013). Those that apportioned part of their remittances for investment    (i.e., business capital or stocks), purchase of consumer durables, motor vehicles and real property also went down 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 master sample was generated using a stratified multi-stage probability sampling scheme. For Q2 2013, the CES was conducted during the period 3-15 April 2013 with a total sample size of 5,884 households, of which 3,036 (51.6 percent) were from the NCR and 2,848 (48.4 percent) from the AONCR.

For inquiries, please contact the Department of Economic Statistics

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