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Consumer Confidence More Upbeat for Q2 2018

06.08.2018

Consumer outlook improves for Q2 2018

Consumer confidence was more optimistic for Q2 2018, with the overall confidence index (CI) increasing to  3.8 percent from 1.7 percent for Q1 2018. The higher CI indicates that the optimists increased and continued to outnumber the pessimists. 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 positive outlook for Q2 2018 was mainly brought about by their expectations of: (a) improvement in peace and order (b) additional income, (c) availability of more jobs, (d) effective government policies, and (e) increase in family savings.

For the next quarter and the year ahead, consumers’ optimism remained generally steady, as the CIs showed a fractional decline from previous quarter’s survey at 8.7 percent from 8.8 percent and at 23.1 percent from  24 percent, respectively. The relatively steady outlook for the next quarter and the year ahead stemmed from the counterbalancing of the number of respondents that reported more positive views on the economy, in anticipation of more jobs and additional income, versus those with negative views due to expectations of higher prices of goods.

Consumer confidence turns positive on economic condition of the country and family finances but weakens on family income for Q2 2018

Consumer outlook is measured across three component indicators, namely, the country’s economic condition, family financial situation, and family income. For Q2 2018, the improved consumer sentiment on the country’s economic condition and family financial situation outweighed the less favorable outlook on family income. Notably, the CIs for the country’s economic condition and family financial situation reverted to positive territory for the current quarter while family income edged lower from a quarter ago. For the near term and the year ahead, consumer confidence on economic condition of the country was more optimistic while outlook on family financial situation and income turned less positive compared to the previous quarter’s survey results.

Consumer outlook across income groups improves for the current quarter

Consumer outlook across income groups improved for the current quarter but was mixed for the next quarter and the year ahead. For the current quarter, the low-income group remained pessimistic due to the expected higher prices of goods and low income, but the number that said so declined relative to the previous quarter survey results. Meanwhile, the middle- and high-income groups were both more optimistic for the current quarter as they anticipated improvement in peace and order, additional income, and salary increase.

For the next quarter, the sentiment of consumers was less favorable for the low-income, broadly steady for the high-income but was more upbeat for the middle-income group. For the year ahead, consumer outlook was more optimistic for the low-income group but was less favorable for the middle- and high-income groups.

Consumers’ spending outlook for the next quarter is broadly steady

The spending outlook index of households on basic goods and services was broadly steady at 36.3 percent for Q3 2018 from 37.1 percent in the prior survey report. Higher spending was expected on house rent and furnishings, communication, education, recreation and culture, and restaurants and cafes, indicating that inflationary pressures could come from these goods and services. Meanwhile, fewer respondents indicated higher expenditures on food, non-alcoholic and alcoholic beverages, water, electricity, fuel, and transportation. The spending outlook was generally steady for clothing and footwear, medical care, and personal care and effects.

The percentage of households that considered the current quarter as a favorable time to buy big-ticket items declined to 30.7 percent from 31.6 percent for Q1 2018. Meanwhile, the buying intentions of respondents for big-ticket items were broadly steady at 11 percent for the year ahead from the 10.1 percent in the previous survey round, due largely to the generally stable buying intentions for motor vehicle and real estate and more robust buying intentions for consumer durables.

The percentage of households with savings increases for Q2 2018

For Q2 2018, the percentage of households with savings rose to 37.4 percent from 36.6 percent in the previous quarter. The increase in the number of savers was observed in AONCR while number of savers decreased in NCR.

Meanwhile, the percentage of respondents who reported that they could set aside money for savings during the current quarter rose to 43.3 percent (from 41.8 percent for Q1 2018).

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

The survey results showed that consumers anticipated inflation to increase, interest rates to go up and peso to depreciate in the next 12 months. Respondents expected the rate of increase in commodity prices to be above the government’s 2 to 4 percent inflation target range for 2018, at 4.2 percent over the course of the next 12 months (lower than the anticipated 4.7 percent in the Q1 2018 survey). Meanwhile, more respondents expected unemployment rates to rise while fewer firms anticipated the interest rate to increase and the peso to depreciate against the US dollar over the next 12 months compared to a quarter ago.

OFW households that utilize their remittances for savings decline while those for investment increase for Q2 2018

Of the 446 households included in the survey that received OFW remittances for Q2 2018, 94.2 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 education (64.1 percent), medical expenses (46.9 percent), debt payments (22.9 percent), savings (33.9 percent), purchase of appliances/consumer durables (21.1 percent), purchase of house (8.7 percent), and purchase of car/motor vehicle (7 percent) declined. Meanwhile, the percentage of OFW households who allocated part of their remittances for investment (5.2 percent) and other miscellaneous expenses (4.9 percent) increased.

Debt-to-income ratio of surveyed respondents is 27 percent

More than one-third of the respondents and/or spouse are under debt situation at present. For the current quarter, debt-to-income ratio of surveyed respondents was at 27 percent.

About the survey

The Q2 2018 CES was conducted during the period 2 – 14 April 2018. 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 5,517 households, of which 2,681 (48.6 percent) were from NCR and 2,836 (51.4 percent) from AONCR.

Of the sample size, 5,339 households responded to the survey, equivalent to a response rate of 96.8 percent (from 97 percent in the last quarter’s survey). The respondents consist of 2,609 households in NCR (with  97.3 percent response rate) and 2,730 households in AONCR (with 96.3 percent response rate). The majority of the respondents were from the middle-income group (43 percent) and the low-income group (42.5 percent) while 14.5 percent were from the high-income group.

For inquiries, please contact the Department of Economic Statistics

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