BSP survey shows business confidence up amid stronger outlook

MANILA – Business confidence in the Philippines improved in February 2026, with firms expressing a more upbeat outlook for the year ahead, according to the latest monthly Business Expectations Survey (BES) of the Bangko Sentral ng Pilipinas (BSP).

The year-ahead confidence index (CI) rose from 38.6 percent in January 2026 to 51.1 percent in February 2026, with businesses expecting steady consumer demand throughout the year.

Firms also see higher public works spending and ongoing governance reforms supporting economic growth in 2026.

The economic outlook for the next quarter likewise improved, with the quarter-ahead CI increasing from 33.3 percent to 37.4 percent.

Businesses are counting on favorable weather conditions and typically strong summer revenues to drive near-term growth, while also expecting government spending to pick up as investor confidence recovers.

The current-month CI also jumped from 0.9 percent in January to 8.2 percent in February, with a positive CI indicating that more respondents are optimistic than pessimistic.

The BSP’s full survey report attributed the stronger sentiment in February to expectations of higher income and sales supported by stronger demand for goods and services, better domestic economic conditions including higher growth prospects and stable inflation, and improved investor confidence on the back of higher public infrastructure spending and sustained governance reforms.

Current-month operational indicators also improved, with the volume of business activity CI rising from 3.5 to 10.8 and the volume of total orders booked CI swinging from -0.1 to 12.4.

Firms reported a less tight cash position, with the financial condition index improving from -19.2 percent to -15.2 percent, though the credit access index became more negative, moving from -0.6 percent to -4.0 percent.

Average capacity utilization for the industry and construction sectors, however, declined from 69.6 percent in January to 67.2 percent in February, driven by more firms operating at medium capacity and fewer at high capacity.

Hiring intentions for the quarter ahead and year ahead also strengthened, with the employment outlook index rising from 11.3 percent to 27.2 percent for the three-month-ahead period, and from 23.3 percent to 30.0 percent for the year ahead, suggesting resilient labor market conditions through 2026.

Expansion plans in the industry sector, however, eased, as the share of firms with expansion plans for the next quarter declined from 14.1 percent to 11.6 percent, and for the next 12 months from 24.3 percent to 14.2 percent.

Respondents cited stiff domestic competition (70.0 percent), insufficient demand (33.2 percent), and high interest rates (20.5 percent) as major constraints to business activities in February.

Inflation expectations of businesses remain firmly anchored, with firms projecting inflation to average 2.3 percent in February, 2.5 percent in May, and 2.7 percent over the next 12 months—all below the BSP’s 3.0 percent target for 2026 but within the ± 1.0 percentage-point tolerance range.

Firms expect the Philippine peso to average PHP 58.68 to USD 1 in February, PHP 58.76 to USD 1 by April, and PHP 58.94 to USD 1 over the next 12 months.

The BSP noted that the February 2026 BES was conducted before the onset of the recent Middle East conflict, and that the sustained recovery in business confidence and stable inflation expectations will depend on how long the conflict lasts and how it affects the domestic economy.

The monthly BES provides a more frequent assessment of business confidence, enabling the BSP to adjust its policy response more proactively to fast-changing domestic and international developments.

The February survey covered 502 firms nationwide—196 in the National Capital Region (NCR) and 306 in areas outside the NCR, covering all 18 regions—with a response rate of 48.6 percent and a sampling error margin of ±6.2 percent. /DG