The employment outlook turned less favorable as companies are not keen on hiring more workers over the next quarter amid the elevated inflation rate and weaker peso against the US dollar, results of the fourth-quarter Business Expectation Survey conducted by the Bangko Sentral ng Pilipinas show.
Data showed the employment outlook index declined to 21.2 percent for the first quarter of 2023 from 22.7 percent in the previous survey. Hiring outlook mfor the next 12 months also inched lower to 29 percent from 30 percent.
“The lower readings in Q4 2022 suggest that hiring intentions may turn less favorable for the next quarter and the next 12 months,” the BSP said in a statement.
The percentage of businesses in the industry sector with expansion plans for the first three months of 2023 also declined to 19.5 percent from 23.4 percent in the previous quarterly survey.
Companies in the mining and quarrying, manufacturing and agriculture, fishery and forestry sub-sectors that reported expansion plans declined, while those in the electricity, gas and water sub-sector increased.
The percentage of industry firms with expansion plans for the next 12 months slightly decreased to 22.9 percent from 23.2 percent.
The outlook for the first quarter of 2023 of the respondent firms was less optimistic across sectors, except for those in the construction sector, which posted a more upbeat outlook.
Firms in the industry, services and wholesale and retail trade sectors cited a number of reasons for their less favorable outlook, including lower consumer demand due to the increase in prices of goods including petroleum products and services as well as the peso depreciation.
Inflation in November accelerated to a 14-year high of 8 percent from 7.7 percent in October, on the back of higher prices of food and non-alcoholic beverages. This brought the average inflation from January to November to 5.6 percent.
The interagency Development Budget Coordinating Committee adjusted the average 2022 inflation rate assumption to 5.8 percent from the previous estimate of 4.5 percent to 5.5 percent, given the persistent high prices of food and transport costs.
Meanwhile, the sentiment of businesses in the construction sector was more upbeat as firms expect new projects. For the fourth quarter of 2022, the major business risks identified by the respondents were stiff domestic competition (48.3 percent of respondents) and insufficient demand (31.9 percent of respondents).
Concerns over COVID-19 remained a threat to business activity, though at a lesser degree. The number of firms indicating COVID-related restrictions as a business constraint declined from 394 in the third quarter of 2020 to 51 in the fourth quarter of 2022.
The same survey showed that the business sentiment turned less optimistic in the fourth quarter of 2022 compared to the third quarter because of elevated inflation, weaker peso and rising costs of production.
The overall confidence index in the fourth quarter declined to 23.9 percent from 26.1 percent in the third quarter.