BUSINESS sentiment rose in June after three months in negative territory, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, hitting a neutral zero percent following a drop in oil and energy prices and the reopening of classes.
The confidence index (CI), which was last positive at 8.2 percent in February, improved from -25.2 percent in May. At zero percent, the results “suggests that optimists and pessimists are nearly equal in number,” the central bank said.
“[F]irms expected lower oil prices and energy costs to support increased business activity during the period,” the BSP said, adding that respondents were also anticipating increased consumer spending as the school year started.
Sentiment for September, or three months from now, also improved, rising to 18.8 percent from 0.6 percent, while the outlook 12 months ahead rose to 42.4 percent from 27.8 percent.
“Over the next 12 months, firms expected business conditions to improve further despite concerns that inflation could breach the Bangko Sentral ng Pilipinas’ four-percent tolerance ceiling in 2027,” the central bank said.
“A large share of industry firms and firms across all sectors indicated plans to expand operations and increase hiring, respectively, both of which could support economic growth,” it added.
For the September outlook, respondents said they were upbeat about higher household spending and a decline in inflation. For June next year — 12 months from now — they tagged likely stronger consumer demand, a resolution of the war in the Middle East and improved global and domestic economic conditions.
The CI with regard to financial conditions, however, slipped to -26.8 percent from -25.7 percent while that for credit access rose to -5.7 percent from -7.3 percent. Average capacity utilization, meanwhile, rose to 73.3 percent from 70.5 percent in May.
The top business constraints cited by respondents were stiff domestic competition, low demand and financial problems, the BSP said.
Fewer companies said they planned to hire more workers three months from now — 1.8 percent from 11.9 percent — while the rate edged down to 20.2 percent from 20.4 percent for the next 12 months.
Firms were more optimistic with regard to expansion plans, with the index for three months from now surging to 20.4 percent from 9.7 percent and that for 12 months from now also markedly higher at 18.7 percent from 11.8 percent.
“Overall, the favorable business outlook could support economic growth for 2027,” the BSP said.
As for inflation, respondents said it could settle at 5.6 percent 12 months from now, improving from 5.9 percent in May. Companies that expect higher inflation were worried about energy costs and supply constraints, the war in the Middle East and a weaker peso.
Companies also expect the peso borrowing rate to increase three and 12 months from now, and the currency to appreciate over the same periods.
The BSP, which switched to monthly business confidence reports this year to better monitor shifts in sentiment, said it would continue to “monitor the economic implications of developments in the Middle East, particularly their impact on business and consumer sentiment, household spending and investment decisions.”
