Consumer confidence improves for Q3 and Q4 2023, but less upbeat for the next 12 months

The consumer sentiment for Q3 2023 improved marginally as the overall confidence index (CI) turned slightly less negative at -9.6 percent from -10.5 percent in Q2 2023.  This is reflective of the decrease in the percentage of pessimists, which outweighed the decrease in the percentage of optimists. Consumers attributed their less pessimistic sentiment for Q3 2023 to: (a) more available jobs and permanent employment, (b) higher income from wages/salaries, remittances, and other sources, and (c) additional working family members.

For the next quarter (Q4 2023), the consumer sentiment likewise improved as the CI increased to 7.8 percent from 4.6 percent a quarter ago. Meanwhile, the consumer sentiment for the next 12 months was less optimistic as the CI declined to 18.9 percent from 20.5 percent in Q2 2023.

In Q3 2023, consumer outlook is mixed across the three component indicators and across income groupsThe sentiment in Q3 2023 is mixed across the three component indicators of consumer confidence: (1) less pessimistic for the country’s economic condition, (2) more pessimistic for the family’s financial situation and (3) steady for family income; and across income groups, i.e., less pessimistic among the low-income group, more pessimistic among the middle-income group, and less optimistic among the high-income group.

Consumers are less hesitant about buying big-ticket items in Q3 2023. The consumer sentiment on buying big-ticket items for Q3 2023 was less pessimistic as the CI turned less negative at -62.7 percent from -67.7 percent in Q2 2023.

The percentage of households with loans and savings increases in Q3 2023. In Q3 2023, 26.6 percent availed of a loan in the last 12 months, higher than the 24.8 percent recorded in Q2 2023. Meanwhile, the percentage of households with savings also rose to 32.8 percent from 30.2 percent in Q2 2023.

Consumers expect higher inflation, interest and unemployment rates, and a weaker peso in Q3 2023. Consumers expect that the interest rates may increase, and the peso may depreciate against the U.S. dollar for Q3 and Q4 2023 and the next 12 months. Furthermore, they anticipate that the unemployment rate may rise for the current quarter, remain steady for the next quarter, and decline for the next 12 months. Meanwhile, households also expect that the inflation may increase at a faster pace for all reference periods as the number of respondents who expect higher inflation for said periods increased compared with the Q2 2023 survey results. Specifically, consumers are expecting that the inflation rate may average at 6.6 percent for the next 12 months, which is above the upper end of the National Government’s inflation target range of 2 to 4 percent for 2023-2024.

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[1] The Q3 2023 CES was conducted during the period 3 – 14 July 2023. In the Q3 2023 CES, 5,404 households were identified as eligible households – 2,736 (50.6 percent) were from the NCR and 2,668 (49.4 percent) from AONCR. Of the said sample size, 5,272 households participated to the survey, equivalent to a response rate of 97.6 percent (from 97.8 percent in the Q2 2023 survey). Respondents consisted of 2,689 households in the NCR (with 98.3 percent response rate) and 2,583 households in AONCR (with 96.8 percent response rate). The middle-income group comprised the largest percentage of respondents (38.4 percent), followed by the high-income group (35.9 percent) and the low-income group (25.6 percent).