Statement by BSP Assistant Governor Ma. Cyd N. Tuaño-Amador
Consumer sentiment improved in Q4 2014 based on the Consumer Expectations Survey that was conducted by the Bangko Sentral ng Pilipinas during the period 1 – 11 October 2014. The overall confidence index (CI) increased to -21.8 percent from -26.3 percent in Q3 2014. The higher (but still negative) CI in Q4 2014 means that the number of households with an optimistic outlook increased but they continued to be outnumbered by those who think otherwise. 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.
According to respondents, their improved outlook during the current quarter was due to expectations of: (a) stable prices of commodities; (b) availability of more jobs and increase in the number of employed family members; (c) good harvests; (d) additional income/higher salary due to receipt of Christmas bonus and 13th month pay; and (e) brisker business activity leading to higher household income. For the next quarter (Q1 2015), consumer expectations turned sanguine as the CI moved into positive territory at 0.7 percent from -1 percent a quarter ago. This indicates that the number of households with positive outlook increased and exceeded those with negative views. Meanwhile, consumer confidence for the next 12 months was broadly steady compared to the previous quarter’s survey results.
Consumer confidence is measured across three indicators, namely, the country’s economic condition, family financial situation and family income. Consumers’ confidence on the country’s economic condition improved in the current quarter and next quarter but weakened for the year ahead. Similarly, consumers anticipated their family financial conditions to be more favorable for the current quarter and next quarter and to be stable for the year ahead compared to the previous quarter’s survey results. Their outlook on family income in the current quarter was broadly unchanged but improved for the next quarter and the year ahead. The improved outlook across the three indicators was attributed by respondents to expectations of brighter job prospects, stable prices of commodities, additional income and lower debt payments.
The outlook of the low-income group improved for the current quarter and next quarter but sentiment for the year ahead broadly weakened. The middle-income group consistently reported improvement in consumer confidence for the current quarter and next quarter as well as for the year ahead. Meanwhile, the sentiment of the high-income group increased in the current quarter but held steady for the next quarter and the year ahead. These suggest that improvement in consumer outlook was broad-based─evident across income groups─with the middle-income group showing the biggest improvement in sentiment. The high-income group continued to be the most optimistic.
Survey results showed that respondents’ spending outlook on basic goods and services was broadly steady, with the CI at 41.8 percent in Q1 2015 (from 42.2 percent in the previous quarter). This indicates that respondents who expect to spend more on goods and services outnumbered those who said otherwise, but the number that said so remained unchanged from the previous quarter’s survey results as expectations on family finances increased with the CI slightly above zero. Across commodity groups, fewer respondents anticipated an increase in expenditures on water, fuel, transportation, education, restaurants and cafés, and personal care and effects while more respondents expected an increase in expenditures on clothing and footwear, house rent, and communication. Meanwhile, the spending outlook was steady for food, electricity, and medical care.
The percentage of respondents that considered the current quarter as a favorable time to buy big-ticket items was broadly steady for consumer durables and motor vehicles but decreased for real estate. Buying intentions of respondents for all big-ticket items for the year ahead improved, with the index increasing to 10.4 percent from 9.3 percent a quarter ago.
In Q4 2014, the number of households with savings declined slightly to 25.7 percent compared to 26.9 percent in the previous quarter. Households with savings decreased among the low- and middle-income groups but increased moderately for the high-income group. According to respondents, they save money for the following reasons: (a) for emergencies, (b) health and hospitalization, (c) retirement, (d) education, and (e) business capital and investment. More than two-thirds (69.4 percent) of household savers have bank deposit accounts while 29.6 percent kept their savings at home and 22.2 percent put their money in cooperatives, paluwagan and other credit/loan associations.
The percentage of respondents who reported that they could set aside money for savings during the current quarter was broadly unchanged at 35.6 percent (from 34.9 percent in Q3 2014). Meanwhile, the proportion of those that could set aside 10 percent or more of their monthly gross family income increased to 38 percent (from 35.6 percent in Q3 2014).
Expectations on Selected Economic Indicators
Although more respondents anticipated prices to go up compared to a quarter ago, their mean inflation forecast was lower at 5.8 percent (from 6.1 percent from the previous quarter), indicating that inflation is likely to remain stable in the next 12 months. Meanwhile, more respondents expected interest rates to increase and the peso to depreciate against the US dollar in the year ahead. Respondents who expected unemployment to go up for the next 12 months declined but nevertheless continued to outnumber those that held the opposite view.
Expenditures of Overseas Filipino Workers (OFWs)
Of the 558 households included in the survey that received OFW remittances in Q4 2014, 96.1 percent used the remittances that they received to purchase food and other household needs. Nearly three-fourths (72.2 percent) of the OFW households allocated part of their remittances for education, 56.3 percent for medical expenses and 42.1 percent for debt payments. The percentage of OFW households that utilized their remittances for savings rose to 42.1 percent from 39.7 percent in the previous quarter. Meanwhile, those that allotted their remittances for investment and for the purchase of consumer durables and house remained steady. Those that apportioned part of their remittances to purchase cars/motor vehicles decreased.
About the survey
The Q4 2014 CES was conducted during the period 1 – 11 October 2014. The CES samples were drawn from the Philippine Statistics Authority-National Statistics Office’s (PSA-NSO) Master Sample List of Households, which is considered a representative sample of households nationwide. The CES sample households were generated using a stratified multi-stage probability sampling scheme. It has a total sample size of 6,389 households, of which 3,212 (50.3 percent) were from NCR and 3,177 (49.7 percent) from AONCR. Of the total sample size, 6,234 households responded to the survey, equivalent to a response rate of 97.6 percent (from 97.4 percent in the last quarter’s survey). This consists of 3,143 households (or 97.9 percent response rate) in NCR and 3,091 households (or 97.3 percent response rate) in AONCR.
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