The consumer sentiment for the third quarter of this year improved as the overall confidence index (CI) turned less negative at -15.6 percent from -20.5 percent in the previous quarter’s survey results.

The Bangko Sentral ng PIlipinas said this is reflective of the decrease in the percentage of pessimists, which outweighed the slight decrease in the percentage of optimists.

According to the respondents, their less pessimistic sentiment for Q3 2024 was attributed to expectations of: higher income from wages/salaries, remittances, and other sources, additional sources of income, permanent employment and more available jobs and additional working family members.

For the next quarter, the consumer outlook turned optimistic as the CI reverted to positive territory at 0.7 percent from -0.4 percent in Q2 2024. The consumer confidence for the next 12 months, however, was less optimistic as the CI declined to 9.9 percent from 13.5 percent in Q2 2024.

For Q3 2024, consumer sentiment improved across all component indicators and income groups.

Across the three component indicators, consumer outlook for Q3 2024 was less pessimistic for the country’s economic condition and the family’s financial situation, and little changed for family income. Consistent with the national trend, consumer confidence across income groups (i.e., low-income, middle-income, and high-income groups) was also less pessimistic for Q3 2024.

The consumer sentiment on buying big-ticket items for Q3 2024 was more pessimistic as the CI turned more negative at -68.9 percent from -64.5 percent in Q2 2024.

For Q3 2024, the percentage of households with savings decreased to 29 percent from 31.4 percent in Q2 2024. Meanwhile, about 25.5 percent of the households availed of a loan in the last 12 months, slightly higher than the 24.6 percent recorded in Q2 2024.

Consumers anticipate that interest rates may increase and the peso may depreciate against the U.S. dollar for Q3 and Q4 2024 and the next 12 months. Similarly, households expect that the unemployment rate may increase across all reference periods. Further, households also expect that inflation may increase at a faster rate for the rest of 2024 as the number of respondents who expected higher inflation increased compared with the Q2 2024 survey results. Specifically, consumers expect that the inflation rate may average at 5.9 percent for the next 12 months, which is above the National Government’s inflation target range of 2 to 4 percent for 2024-2025.

Meanwhile, the business sentiment in the Philippines remained optimistic in Q3 2024 as the overall confidence index was little changed at 32.9 percent from 32.1 percent in Q2 2024.

The steady sentiment reflected the decrease in the percentage of pessimists, which outweighed the decrease in the percentage of optimists. 

The firms’ upbeat business confidence in Q3 2024 was buoyed by their anticipation of: increase in demand for certain goods and services such as food and beverage, apparel, education, and personal services, easing inflation, seasonal uptick in business activities due to the start of the new school term and the pre-holiday inventory stocking by retailers, and expansion and improvement of business operations.

For Q4 2024, the country’s business confidence turned bullish as the overall CI improved to 56.8 percent from 43.7 percent in the Q2 2024 survey results. For the next 12 months, business outlook was similarly more upbeat as the overall CI increased to 58 percent from 56.5 percent in the Q2 2024 survey results.

The Q3 2024 business sentiment was more optimistic in the construction and the services sectors but less buoyant in the industry and the wholesale and retail trade sectors.

Business confidence was also generally more optimistic in Q3 2024 across all types of trading firms, except the importers and domestic-oriented firms whose sentiments were less optimistic and little changed, respectively.

The average capacity utilization of the industry and construction sectors in Q3 2024 was generally steady at 71.9 percent from 72 percent in Q2 2024.

Firms expect tight cash or liquidity positions in Q3 2024 as the financial condition index was little changed. Likewise, businesses anticipate tight access to credit in Q3 2024 as the index on access to credit remained negative.

Firms expect that the peso may depreciate against the U.S. dollar in Q3 2024 but may appreciate in Q4 2024 and the next 12 months. Further, firms expect that peso borrowing rates may rise in the second half of 2024 and the next 12 months.

Businesses anticipate that the inflation may rise in the second half of 2024 and the next 12 months. However, the number of firms that expected higher inflation decreased vis-à-vis the Q2 2024 survey results. Firms also expect that the inflation rate may average at 4.3 percent in Q3 2024, and 4.4 percent inQ4 2024 and the next 12 months, which are all above the upper end of the National Government’s 2–4 percent inflation target range for 2024-2025.