Consumers’ outlook improved for Q4 2015 as the overall confidence index (CI) rose to -8.1 percent from -11.6 percent for Q3 2015. The higher (but still negative) CI for Q4 2015 means that the number of households with an optimistic view increased but was less than 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. A positive CI indicates a favorable view, except for the inflation rate, the peso-borrowing rate, unemployment and change in prices, where a positive CI indicates the opposite. The overall consumer CI measures the average direction of change in three indicators - overall condition of the economy, household finances, and household income.
According to respondents, their more favorable outlook during the current quarter was due to expectations of: (a) more jobs and increase in the number of working family members; (b) additional income/higher salary given the receipt of Christmas bonus and 13th month pay; (c) stable prices of commodities; (d) effective government policies; (e) improvements in infrastructure; and (f) brisker business activity leading to higher household income.
For the next quarter (Q1 2016), consumers’ optimism was sustained as the CI was broadly steady at 5.7 percent compared to the previous quarter’s survey results. This indicates that the optimists continued to top the pessimists for the next quarter. Consumers’ sentiment was more favorable for the next 12 months, with the CI increasing to 18 percent from 15.8 percent a quarter ago. Consumers anticipated lower unemployment, improvements in the country’s economy and the election of new government officials for the year ahead.
Based on the three component indicators by which consumer sentiment is measured, the survey results showed that for Q4 2015, consumer confidence on the country’s economic condition increased while outlook on family financial situation and income was broadly steady. Notably, consumer perception on family income and financial situation registered the highest (-0.5 percent) and the second highest (-9.9 percent) CIs, respectively, since Q1 2007. For the next quarter (Q1 2016) and the year ahead, consumer outlook on the country’s economic condition was more sanguine while their outlook on family financial situation and income declined (but remained positive) compared to their expectations in the previous quarter’s survey.
Consumer confidence for Q4 2015 improved across income groups due largely to their more favorable outlook on the country’s economic condition which prevailed over their mixed views on family income and financial situation. The high-income group registered the highest CI quarter-on-quarter. For the next quarter and the year ahead, the middle- and high-income groups generally reported higher consumer confidence while that of the low-income group declined in view of their less favorable expectations on their family income and financial situation. These suggest that the improvement in consumer outlook was driven primarily by the increase in confidence of the middle- and high-income groups. The high-income group continued to be the most bullish across income groups.
Survey results showed that more households (than those who said otherwise) expected their expenditures on basic goods and services would go up for Q1 2016 but the number that said so declined compared to the last quarter’s survey, with the CI at 34.2 percent (from 37.3 percent in the previous quarter). The spending outlook index declined across commodity groups, except for house rent and furnishing, and medical care. The biggest decreases were observed for clothing and footwear, electricity, restaurants and cafes, and food, non-alcoholic and alcoholic beverages.
The percentage of households that considered the current quarter as a favorable time to buy big-ticket items rose to 30.2 percent from 27.4 percent a quarter ago. The more sanguine outlook on buying conditions was observed across the three big-ticket items. The outlook on buying conditions for real estate was the most optimistic, followed by consumer durables which posted a record-high index since Q1 2007. Respondents indicated that their outlook was driven by the following considerations: (a) real property is a good investment and a means to avoid house rental fees, (b) consumer durables provide family entertainment and convenience, and (c) motor vehicles can be both for business and personal use.
For Q4 2015, the percentage of households with savings increased to 30.2 percent from 28.9 percent a quarter ago, primarily driven by the growth in AONCR savers. Across income groups, the proportion of households with savings increased in the middle-income group while those in the low- and high-income groups remained broadly steady. According to respondents, they save money for the following reasons: (a) emergencies, (b) education, (c) health and hospitalization, (d) retirement, and (e) business capital and investment. About two-thirds (66.6 percent) of household savers had bank deposit accounts while 40.1 percent kept their savings at home and 32.7 percent put their money in cooperatives, paluwagan, other credit/loan associations, SSS, PAG-IBIG and as investments (e.g., stocks and insurance).
Similar to the number of households with savings, the percentage of respondents who reported that they could set aside money for savings during the current quarter increased to 41.5 percent (from 36.2 percent for Q3 2015). Likewise, the proportion of those that could set aside 10 percent or more of their monthly gross family income was higher at 35.6 percent (from 30.3 percent for Q3 2015).
Expectations on Selected Economic Indicators
Respondents anticipated inflation to remain steady at 4.2 percent, reflecting their outlook of a stable inflation for the year ahead. This indicates that inflationary expectations are likely to remain well-anchored over the next 12 months as the number of respondents with views of higher inflation declined compared to a quarter ago. Meanwhile, more respondents expected interest rates to increase as the CI edged higher for this quarter’s survey. Respondents are of the view that the peso would continue to depreciate against the US dollar over the next 12 months. Meanwhile, fewer respondents expected unemployment to rise in the year ahead as the CI declined to 36.9 percent from 48.1 percent in the last quarter’s survey.
Expenditures of Overseas Filipino Workers (OFWs)
Of the 531 households included in the survey that received OFW remittances for Q4 2015, 95.9 percent used the remittances that they received to purchase food and other household needs. The proportion of OFW households that said so as well as those that allotted part of their remittances for purchase of house (11.9 percent) and for investment (6.6 percent) remained steady. Meanwhile, the percentage of OFW households that allocated part of their remittances for education (69.5 percent), medical expenses (59.7 percent), debt payments (42.7 percent), purchase of consumer durables (21.8 percent) and purchase of car/motor vehicle (6.4 percent) declined. More OFW households, however, utilized their remittances for savings at 41.4 percent (from 38.2 percent last quarter).
About the survey
The Q4 2015 CES was conducted during the period 1 - 12 October 2015. The CES samples were drawn from the Philippine Statistics Authority (PSA) 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 sample size of 6,020 households, of which 2,904 (48.2 percent) were from NCR and 3,116 (51.8 percent) from AONCR. Of the sample size, 5,845 households responded to the survey, equivalent to a response rate of 97.1 percent (from 97.6 percent in the last quarter’s survey). The respondents consist of 2,838 households (with 97.7 percent response rate) in NCR and 3,007 households (with 96.5 percent response rate) in AONCR. Nearly half of the respondents (47.3 percent) were from the low-income group, 38.7 percent from the middle-income group, and 14 percent from the high-income group.
Read Full Report