Philippine Business Confidence Turns Pessimistic

The Business Confidence Index in the Philippines improved to -10.9 in August 2026 from -20.3 in July, as firms became less pessimistic, with the improvement attributed mainly to higher demand for goods and services. Current-month indicators strengthened, with business activity rising to 7.0 from -0.1, total orders to 12.4 from -0.7, and financial conditions improving to -24.9 from -31.4. Meanwhile, access to credit was slightly tighter at -7.2 from -7.0, while average capacity utilization increased marginally to 69.0% from 68.6%. Three-month confidence rose to 24.6 from 3.7, while 12-month confidence increased to 36.4 from 29.4. Firms also raised expectations for business activity and hiring over the next three months and 12 months, although the share of firms planning to expand operations over the next 12 months declined to 17.1% from 20.8%. Year-ahead inflation expectations eased to 5.4% from 5.6%, but remained above the Bangko Sentral ng Pilipinas’ 4.0% upper bound.

The Business Confidence Index in the Philippines turned negative at -20.3 in July 2026 from 0.0 in June, as firms grew more concerned about higher oil prices, renewed tensions in the Middle East, and persistent inflation. Current-month indicators weakened, with business activity falling to -0.1 from 8.3 in June, total orders to -0.7 from 5.4, and access to credit to -7.0 from -5.7. Financial conditions also deteriorated to -31.4 from -26.8, while capacity utilization fell to 68.6% from 73.9%. Meanwhile, three-month confidence eased to 3.7 from 18.8, while 12-month confidence declined to 29.4 from 42.4. Firms also lowered expectations for activity and orders, while fewer planned to hire amid softer growth. However, the expansion plans index rose to 20.8 from 18.7, signaling that more firms planned to expand next year. Twelve-month inflation expectations rose to 50.1 from 35.7.

The Business Confidence Index in the Philippines improved sharply to 0.0 in June 2026 from -25.2 in the previous month. The turnaround was driven by expectations of higher consumer spending with the start of the new academic year, alongside lower oil prices and energy costs. Notable improvements in the volume of business activity (8.3 vs -4.5 in May), total orders booked (5.4 vs -2.2), and access to credit (-5.7 vs -7.3), while average capacity utilization increased (73.9% vs 70.5%). However, firms continued to report weak financial conditions, with the financial condition remaining negative at -26.8 from -25.7 in the previous month. Looking ahead, the three-month business outlook strengthened to 18.8 from 0.6, while one-year confidence rose to 42.4 from 27.8, supported by expectations of stronger consumer demand, easing inflation, improved economic conditions, and a possible resolution of the Middle East conflict.