PH businesses post divided outlook after oil price relief

MANILA, Philippines — Business sentiment improved in June as easing oil prices offered firms some relief, though optimists and pessimists were evenly split.

The business confidence index rose to zero from -25.2 percent in May, according to a survey of 515 firms conducted between June 5 and 30.

**READ: Business confidence sank further in April **

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A zero reading indicates neutral territory—a sign that business across the country were evenly divided between those expecting conditions to improve and those anticipating further headwinds.

Among firms with a positive outlook, 61.8 percent cited stronger consumer spending tied to the start of the school year, while 11.8 percent said lower oil and energy costs were expected to support business activity.

Tight conditions

Respondents nevertheless remained wary of tighter financial conditions. Stiff competition, weak demand and financial constraints ranked among the biggest concerns, although firms said they expected credit conditions to become less restrictive.

The survey was conducted as the United States and Iran signed a 14-point memorandum of understanding on June 17, formalizing a ceasefire after months of hostilities and launching a 60-day window to negotiate a permanent peace agreement. The truce helped ease fears of supply disruptions and pulled global oil prices lower during the survey period.

Rising confidence

The respite proved short-lived. Fighting flared up again in July, sending crude prices back above $100 a barrel and renewing concerns about inflation and business costs.

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Rising confidence

Looking ahead, businesses were more upbeat about the months ahead during the survey period.

The confidence index for the next three months climbed to 18.8 percent from 0.6 percent, while the 12-month outlook improved to 42.4 percent from 27.8 percent, indicating that optimists further outnumbered pessimists over both horizons.

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READ: BSP: PH consumer confidence slumps to postpandemic low

“Firms expected business conditions to improve further despite concerns that inflation could breach the BSP’s 4-percent tolerance ceiling in 2027,” the central bank said.

“A large share of industry firms and firms across all sectors indicated plans to expand operations and increase hiring, respectively, both of which could support economic growth,” it added. INQ