PHL consumer confidence improves in Q3 2024, optimism grows for Q4

By Francis Allan L. Angelo

Consumer confidence in the Philippines showed signs of improvement for the third quarter of 2024, with expectations for the fourth quarter turning optimistic, according to the latest Consumer Expectations Survey (CES) conducted by the Bangko Sentral ng Pilipinas (BSP).

However, sentiment for the next 12 months remains slightly less upbeat compared to previous forecasts.

The overall consumer confidence index (CI) for Q3 2024 improved to -15.6 percent from -20.5 percent in the second quarter, indicating fewer pessimists despite a slight decrease in the number of optimists.

“The improved sentiment reflects the public’s expectations of higher income from wages, remittances, and other sources, as well as the availability of more jobs,” the BSP noted in its report.

Other factors cited include additional sources of income, permanent employment, and more working family members.

Outlook for Q4 2024 Turns Positive

Looking ahead, Filipino consumers expressed optimism for Q4 2024, as the CI turned positive at 0.7 percent, up from the -0.4 percent recorded in Q2 2024. This marks a significant shift as consumers expect better economic conditions for the upcoming quarter.

However, confidence for the next 12 months slightly weakened, with the CI declining to 9.9 percent from 13.5 percent in the previous quarter.

The tempered optimism is driven by concerns about rising inflation and higher unemployment rates, which consumers expect to persist in the longer term.

Worsening Sentiment on Major Purchases and Savings

Despite improved confidence in general, consumers remain cautious about making large purchases.

The CI for buying big-ticket items, such as cars and homes, fell further to -68.9 percent from -64.5 percent in Q2 2024. This suggests that Filipinos are hesitant to commit to significant expenditures amid economic uncertainties.

Adding to this caution, fewer households reported having savings in Q3 2024, with only 29 percent indicating they were able to save, down from 31.4 percent in the previous quarter.

Meanwhile, more households turned to loans, with 25.5 percent saying they availed of credit in the last 12 months, up slightly from 24.6 percent in Q2 2024.

Economic Concerns Persist

Despite the positive outlook for the remainder of 2024, concerns about inflation, interest rates, and the weakening peso persist.

Consumers expect inflation to average 5.9 percent over the next 12 months, well above the government’s target range of 2 to 4 percent for 2024-2025.

Additionally, higher interest rates and a depreciating peso are anticipated for the remainder of the year and into 2025.

“The public remains worried about rising prices and an unstable job market,” said the BSP. These concerns are evident in consumers’ expectations of higher unemployment rates across all periods surveyed.

 

Survey Details

The Q3 2024 CES was conducted during the period 1 – 12 July 2024. In the Q3 2024 CES, 5,335 households were identified as eligible households, wherein 2,697 (50.6 percent) were from the NCR and 2,638 (49.4 percent) from AONCR.

Of the said sample size, 5,211 households participated in the survey, equivalent to a response rate of 97.7 percent (from 98.2 percent in the Q2 2024 survey).

Respondents consisted of 2,652 households in the NCR (with a 98.3 percent response rate) and 2,559 households in AONCR (with a 97 percent response rate).

The middle-income group comprised the largest percentage of respondents (38.4 percent), followed by the high-income group (36.5 percent) and the low-income group (25.1 percent).