Business sector sentiment for Q1 slips on higher oil prices

This trend, however, is normal, BSPO data showed (Photo: Bangko Sentral ng Pilipinas/Facebook)

MANILA – Business optimism in the Phlippines during the first quarter of 2018 has dropped due to the usual deceleration of business activities in the start of the year and upticks in oil prices last January, Bangko Sentral ng Pilipinas (BSP) survey showed.

BSP Business Expectation Survey (BES) for the first quarter this year showed an index of 39.5 percent from 43.3 percent in the previous quarter.

This trend, however, is normal, BSP data showed.

In 2017, the first quarter index stood at 39.4 percent, down from 39.8 percent in the fourth quarter of 2016.

BSP Deputy Governor Diwa Guinigundo said prices of Dubai crude oil last January rose from around USD64.36 per barrel at the start of the month to as much as USD67.06 by the end of it.

“That was of course reflected in the domestic prices of gasoline, kerosene, and diesel. LPG prices also went up at a less significant amount,” he said.

The survey, done last January 8 to February 22, also cited stiffer competition and transitory impact of the tax reform as additional reasons for their less optimistic business confidence.

The BSP said business sentiment in the country this quarter is similar to that in the US, Canada, China, Hong Kong, and South Korea.

Amid this development, business sentiment per sector was mixed, with outlook of the industry and construction rising contrary to those of wholesale and retail trade and services.

Outlook of the construction sector improved to 35.1 percent from quarter-ago’s 20.1 percent and the industry sector’s rose to 32.3 percent from 30.4 percent in the previous quarter.

“The more upbeat outlook of construction firms was due mainly to expectations of new construction projects (both public and private) to be awarded in 2018,” the BSP reported.

Improvement in the industry firms’ outlook was traced to expectations of higher demand, improvement in production capacity, new product line, enhanced marketing strategies, and increase in households’ disposable income as a result of the tax reform, which cut workers’ tax rates but hiked excise taxes on fuel and introduced excise tax on sugary beverages.