The morale and outlook of business and consumer sectors are in different directions with the former tending on a weak confidence level while the latter is on the optimistic side.

Based on the Bangko Sentral ng Pilipinas’ (BSP) latest Business Expectations Survey (BES), the business confidence index (CI) in the second and third quarters were lower with a less optimistic outlook. The CI in the second quarter slipped to 1.4 percent from 17.4 percent in the first quarter 2021, while for the third quarter, the CI also dropped to 31.4 percent from 42.8 percent previous survey.

In contrast, the consumer sentiment based on the Consumer Expectations Survey (CES) improved for the second and third quarters, and even for the next 12 months. Consumers’ CI improved to -30.9 percent in the second quarter versus -34.7 percent in the previous quarter.

BSP senior director Redentor Paolo Alegre of the Department of Economic Statistics, said those surveyed in the BES and CES continue to point to the COVID-19 public health crisis as bottomline for their overall outlook.

Alegre, who presented both survey results on Friday to the media, said the business confidence is very much attached to what is going on with the pandemic and the weakened CI is attributed to an upsurfe in COVID-19 cases in the latter part of the first quarter.

The reimposition of stricter community quarantine particularly in the National Capital Region or NCR Plus, and the elevated inflation exceeding the government’s target band of two-four percent due to supply constraints are also factors for the tepid CI.

For the next 12 months, the business outlook is on the lucklustre side with a CI decreasing to 52.5 percent from the previous survey result of 60.5 percent. Businesses expect a weaker peso, higher peso borrowing rates and an elevated inflation for the near term.

Alegre said factors affecting the improved CES outlook, in the meantime, are the availability of more jobs and permanent employment, as well as additional or higher income. The effective government policies and programs, particularly to address COVID-19 related concerns, also contributed to an improved CI.

Based on the BES, businesses have a less optimistic outlook for the first half of the year because of concerns over the pace of the vaccination roll-out and also the expected seasonal factors of the milling season for the third quarter. The low demand for power and construction materials with the onset of the rainy season are also expected to affect their operations for the second and third quarters.

Generally, the BSP said businesses’ outlook about their business operations is pessimistic for the second quarter from the “negative views of firms from the wholesale and retail trade and services sectors on the volume of business activity and total orders booked.”

The outlook on employment however remains favorable, said the BSP, despite that capacity utilization is lower for the second quarter but expansion plans are set for the third quarter.

Consumer sentiment is better for the next 12 months because they expect the government to address a lot of COVID-19-related concerns such as the availability of vaccines, provision of financial assistance, and easing of quarantine restrictions.

The CES CI for the third quarter reverted to a positive 1.3 percent from -2.2 percent in the first quarter, noted the BSP. For the next 12 months the CI went up to 19.8 percent from the previous 17.9 percent.

“Consumer outlook in terms of the three component indicators, namely: country’s economic condition, family’s financial situation, and family income also generally improved,” the BSP said.

However consumers’ spending outlook is not as optimistic for the third quarter and buying sentiments for big-ticket items “is less buoyant and shows record-low buying intentions for big-ticket items over the next 12 months,” said the BSP.

The latest BES was conducted April 7 to May 27 with 1,513 firms surveyed nationwide, of which 585 companies are in NCR and 928 are in areas outside NCR.

The BSP organized the CES April 21 to May 1 and surveyed 5,702 households. About 2,865 or 50.2 percent were from the NCR and 2,837 or 49.8 percent were from areas outside NCR.