BUSINESS sentiment remained positive in January but was markedly lower compared to the fourth quarter of last year, the Bangko Sentral ng Pilipinas (BSP) said on Friday as it launched a monthly version of what was previously a quarterly report.
The confidence index (CI) for the month is 0.9 percent, lower compared to the 29.7 percent for October-November 2025. A positive CI means that more survey respondents were optimistic than pessimistic.
The BSP attributed the positive result to expectations of higher consumer demand for certain products and services — such as garments, education services, loan products, mailing and shipping services, and motor vehicle parts — as well as business process enhancements.
Sentiment for the next quarter and the next year was more optimistic: the CI for the quarter ahead was 33.3 percent and that for the next 12 months was 38.6 percent.
Firms were more upbeat about April and the year ahead, the BSP said, as they anticipated increased consumer demand for specific goods and services during the summer and for the majority of products for the rest of the year, improved domestic economic conditions, and better investment prospects supported by recovering government spending, improved governance, and stronger investor confidence.
Sentiment about financial conditions and credit access, however, was negative for January at -19.1 percent and 0.6 percent, respectively.
Average capacity utilization in the industry and construction sectors, meanwhile, was 69.6 percent for the month.
The BSP said that survey respondents identified fierce domestic competition, insufficient demand, and high lending interest rates as the main obstacles to business operations.
Businesses had favorable hiring intentions for April 2026 and over the next 12 months. The associated employment outlook indices were both positive at 11.3 percent and 23.3 percent, respectively.
Industry sector expansion could gain momentum, the BSP said, with 14.1 percent of companies reporting expansion plans for April and 24.4 percent also saying so for the next 12 months.
Businesses anticipate peso borrowing rates to drop in January but increase in April and over the next 12 months.
Expectations for business inflation remain firmly grounded, the BSP said. Businesses expect consumer prices to increase by 2.2 percent in January, 2.4 percent in April and 2.6 percent over the next 12 months.
Inflation came in at 2.0 percent in January based on official data.
The BSP, which has been citing confidence as necessary for economic growth, said it had shifted to a monthly survey to allow it to monitor sentiment more closely and respond more effectively to rapidly changing domestic and external developments.
It aligns with efforts to expand the central bank’s existing macroeconomic surveillance toolkit, the BSP added.