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Consumers Remain Optimistic; Outlook is Broadly Steady for Q1 2017

03.24.2017

Consumer confidence is generally unchanged for Q1 2017

Consumer outlook was broadly steady for Q1 2017, with the overall confidence index (CI) decreasing slightly to  8.7 percent from 9.2 percent for Q4 2016. Despite the modest decline in the CI, consumer confidence remained positive, registering the second highest reading since the start of the nationwide survey in Q1 2007. This indicates that the optimists continued to outnumber the pessimists, but the margin was almost unchanged from that of a quarter ago. 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 current quarter’s relatively steady outlook stemmed from the counterbalancing of the number of respondents that reported more positive views on the economy versus those with negative views due to: (a) higher prices of goods and household expenditures, (b) poor harvest, and (c) unfavourable weather conditions. Meanwhile, respondents with positive views cited the following reasons: (a) improvements in the peace and order situation, (b) additional family income due to higher salary and stronger business activity, (c) availability of more jobs and increase in the number of employed family members, and (d) effective government policies.

For the next quarter (Q2 2017) and the year ahead, consumer confidence was less optimistic as the CIs declined but remained positive at 16.5 percent (from 18.8 percent a quarter ago) and 31.7 percent (from 33.4 percent in the previous quarter’s survey results), respectively. This indicates that the number of households with positive outlook decreased but continued to exceed those with negative views. Respondents’ less favorable outlook for the next quarter and the year ahead emanated from households’ concerns about (a) higher prices of goods,   (b) depreciation of the peso, (c) poor harvest due to bad weather conditions, and (d) slowdown in business activity.

Consumer confidence is measured across three component indicators, namely, the country’s economic condition, family financial situation, and family income. For Q1 2017, consumer sentiment on the three indicators was mixed. The outlook on the economic condition of the country was unchanged while that on family financial situation was broadly stable. Notably, record-high CIs were posted on the outlook on the country’s economy (matching the all-time high CI for Q4 2016 at 21.9 percent) and family financial situation (at 1.2 percent from 0.7 percent). Meanwhile, consumers’ views on family income was less optimistic for the current quarter. For the next quarter (Q2 2017) and the year ahead, consumers’ views on the economic condition of the country and family financial situation turned less optimistic but was broadly steady on family income when compared to their expectations in the previous quarter’s survey. According to respondents, their less positive outlook was due mainly to the expected higher prices of goods, problem on the peace and order situation, poor weather conditions, and higher excise tax on fuel and cars.

Consumer outlook was mixed across income groups for the current quarter. The low- and middle-income groups both registered a weaker outlook for the current quarter while that of the high-income group was more optimistic.  For the near term and the year ahead, the sentiment across income groups was generally less favorable.

More respondents expect an increase in spending on house rent and furnishing, water, electricity, fuel, and transportation for Q2 2017

The spending outlook index of households on basic goods and services was broadly steady at 28.7 percent for   Q2 2017. Across commodity groups, the spending outlook was mixed. More respondents expected an increase in expenditures on house rent and furnishing, water, electricity, fuel, and transportation, while fewer respondents expected to spend more for clothing and footwear, medical care, communication, education, recreation and culture, and personal care and effects. The spending outlook was steady for food, non-alcoholic and alcoholic beverages, and restaurants and cafes.
The percentage of households that considered the current quarter as a favorable time to buy big-ticket items increased to 31.5 percent from 30.2 percent for Q4 2016. The outlook on buying conditions improved for real estate but was broadly steady for consumer durables. Meanwhile, outlook for motor vehicles weakened.  Aside from already owning a vehicle, respondents cited high oil prices, lack of parking space, and high registration fees and maintenance costs, as reasons for their less optimistic outlook on buying conditions for motor vehicles. The buying intentions of respondents for big-ticket items were broadly steady at 11.5 percent for the year ahead.

The percentage of households with savings increases for Q1 2017

For Q1 2017, the percentage of households with savings rose to 34.9 percent from 32.6 percent in the previous quarter. According to respondents, they save money for the following reasons: (a) emergencies, (b) education,  (c) retirement, (d) health and hospitalization, (e) business capital and investment, and (f) purchase of real estate. More than two-thirds (67.6 percent) of household savers had bank deposit accounts while 39.6 percent kept their savings at home and 22.9 percent put their money in cooperatives, paluwagan, other credit/loan associations, and as investment (e.g., stocks and insurance (such as SSS and Pag-IBIG)).

The percentage of respondents who reported that they could set aside money for savings during the current quarter increased to 45.1 percent (from 41.1 percent for Q4 2016). However, the proportion of those that could set aside 10 percent or more of their monthly gross family income was lower at 41.4 percent (from 42.4 percent for Q4 2016).

Consumers expect inflation and interest rates to increase and the exchange rate to depreciate for the year ahead

Respondents anticipated inflation to increase to 3.1 percent for Q1 2017 from the 2.7 percent inflation rate expectation in the Q4 2016 survey. Likewise, the number of respondents with views of higher inflation increased compared to that a quarter ago, reflecting stronger inflation expectations over the next 12 months. Meanwhile, fewer respondents expected interest rates to increase as the CI edged lower 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, the unemployment index remained in the negative territory at -4.2 percent (from -9.3 percent for Q4 2016). This means that more respondents compared to those who said otherwise expected unemployment to decline over the next 12 months, suggesting continued better employment opportunities, although the number that indicated so was lower compared to the previous quarter.

OFW households that utilize their remittances for savings and investment decline for Q1 2017

Of the 485 households included in the survey that received OFW remittances for Q1 2017, 98.1 percent used the remittances that they received to purchase food and other household needs. The proportion of households that said so as well as those that allotted part of their remittances for purchase of consumer durables (22.5 percent) and other miscellaneous expenses (3.9 percent) increased. Meanwhile, the percentage of OFW households who allocated part of their remittances for education (68.2 percent), medical expenses (53 percent), savings   (36.9 percent), debt payments (31.3 percent), purchase of house (12.4 percent), purchase of motor vehicles  (6.4 percent) and investment (6.2 percent) declined. The decline in the percentage of households that allotted remittances for savings could be due the higher prices of goods and expected increase in expenditures on their basic goods and services.

About the survey

The Q1 2017 CES was conducted during the period 19 - 31 January 2017. 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 5,574 households, of which 2,838 (50.9 percent) were from NCR and 2,736 (49.1 percent) from AONCR.
Of the sample size, 5,357 households responded to the survey, equivalent to a response rate of 96.1 percent (from 96.7 percent in the last quarter’s survey). The respondents consist of 2,739 households in NCR (with  96.5 percent response rate) and 2,618 households in AONCR (with 95.7 percent response rate). Nearly half of the respondents (43.6 percent) were from the low-income group, 38.5 percent from the middle-income group, and 17.8 percent from the high-income group.

For inquiries, please contact the Department of Economic Statistics

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