Philippine Markets Newsletter

MONDAY MACRO: Consumer sentiment remains muted but is hinting the start of a real positive trend

October 18, 2021

As we are in the last quarter of 2021, many are hoping to return to their pre-pandemic lives in 2022, especially with businesses reopening and restrictions easing.

Although a lot still needs to be done for a full economic recovery to occur, this chart shows that this holiday season may be the start of a real, positive trend.

Philippine Markets Newsletter: 
The Monday Macro Report
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It’s no secret that the Christmas season officially starts in September in the Philippines. In fact, it’s become quite a popular running joke that memes about Jose Mari Chan preparing for the longest holiday season in the world go viral near the end of August.

Everywhere people go in the country, they’re likely to see houses with Christmas décors and lights up, and malls, shops, and radio stations playing Jose Mari Chan’s Christmas classics on the airwaves.

With consumers feeling more optimistic and with the spirit of giving, it’s no surprise that when asked about their expectations about their finances and the economy for the next month, Filipinos tend to be more confident.

The Consumer Confidence Index aims to measure the optimism/pessimism of Filipino consumers regarding their financial situation and the overall economy. Since the data released is based on the previous quarter’s survey results, the index is not incredibly informative…unless we look at another set of data included in the survey.

Aside from being asked about their current sentiment at the time of the survey, respondents are also asked about their confidence about the next three months. This gives us more insight as to what to expect in the next quarter and even in the next 12 months. 

Overall, optimistic consumers imply greater future demand, which incentivizes the creation of more businesses and jobs. On the other hand, pessimistic consumers suggest lower demand in the near-term, which becomes a headwind for growth.

The chart below illustrates this “next quarter” sentiment of the Consumer Confidence Index since 2007.

As we’ll see, confidence expectations for Q4 are almost always the highest for each year compared with the rest of the year, except in 2020.

Consumer confidence reached its peak in Q4 2016 at 27% of consumers being net optimistic. Though this metric saw more declines than rises, it has remained in positive territory until Q3 2020.

However, in Q4 2020, the index fell to -4%, which means respondents were net pessimistic about both their personal finances and the Philippine economy. Reasons for this are mostly pandemic-related, including continued financial pressures from business closures, as well as the lack of vaccines available in the country to allow the economy to fully open up again.

Although consumer confidence has yet to improve to pre-pandemic levels, consumers have become a bit more optimistic. In the Q3 2021 survey, expectations for the next quarter improved to 3% from the previous quarter’s 1%, likely because the holiday season has arrived.

As more people are vaccinated and quarantine restrictions are slowly eased, consumers are more positive about job availability and income growth, increasing their willingness to spend. It also helps that they will be receiving their 13th month pay in time for the holidays.

Although overall insignificant, the index seems to be returning to normal trends, which may be an indication that the economy itself is returning to pre-pandemic levels.

The next quarters of data will be important, to see if the trend is indeed real.

About the Philippine Markets Newsletter
“The Monday Macro Report”

When just about anyone can post just about anything online, it gets increasingly difficult for an individual investor to sift through the plethora of information available. 

Investors need a tool that will help them cut through any biased or misleading information and dive straight into reliable and useful data. 

Every Monday, we publish an interesting chart on the Philippine economy and stock market. We highlight data that investors would normally look at, but through the lens of Uniform Accounting, a powerful tool that gets investors closer to understanding the economic reality of firms. 

Understanding what kind of market we are in, what leading indicators we should be looking at, and what market expectations are, will make investing a less monumental task than finding a needle in a haystack.

Hope you’ve found this week’s macro chart interesting and insightful. 

Stay tuned for next week’s Monday Macro report! 


Angelica Lim
Research Director
Philippine Markets Newsletter
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