The Bangko Sentral ng Pilipinas (BSP) released separate surveys on June 26, 2026, revealing diverging sentiment between businesses and consumers. The Business Expectations Survey (BES) showed the overall business confidence index improved to -25.2 in May from -35.8 in April, indicating fewer firms with a negative outlook. Meanwhile, the Consumer Expectations Survey (CES) recorded a sharp decline in household confidence to -42.0 in the second quarter from -15.8 in the first quarter.
Business outlook brightens
Businesses attributed the improvement to expectations of higher consumer spending and corporate earnings, as well as lower oil prices and energy costs. The confidence index for the next three months turned positive at 0.6 from -7.5, supported by expectations of stronger manufacturing, construction and business process outsourcing activity, declining oil prices and higher public infrastructure spending. The 12-month outlook also strengthened to 27.8 from 19.5, driven by expectations of easing inflation and oil price pressures, improved investor confidence and a possible resolution of the Middle East conflict.
Current operating conditions likewise improved for firms. Financial conditions and access to credit became less restrictive, while average capacity utilization in the industry and construction sectors rose to 70.5 percent from 69.9 percent in April. Businesses also reported stronger business activity and order bookings. Despite improving business sentiment, companies remained cautious about expanding operations. Only 11.8 percent of industry firms said they planned to expand over the next 12 months, down from 19 percent in April, although more firms indicated plans to hire additional workers.
Consumer sentiment worsens
In contrast, the CES found household confidence plunged to -42.0 in the second quarter from -15.8 in the first quarter, while expectations for the next quarter turned negative at -16.3 from 1.8. Consumers also became barely optimistic over the next 12 months, with the confidence index easing to 0.2 from 9.6. The BSP said consumers blamed their deteriorating outlook on higher fuel and food inflation brought about by the Middle East conflict, graft and corruption in the government and what they viewed as insufficient government policies and programs to cushion the impact of rising prices.
Households showed signs of tightening their budgets. More respondents said they would defer purchases of big-ticket items such as appliances, vehicles and homes, while saving and borrowing intentions weakened as families prioritized spending on essential goods and services. The BSP said expectations of higher unemployment may also be making consumers more reluctant to take on additional debt.
Inflation expectations diverge
Both businesses and consumers expect inflationary pressures to persist, although the two surveys showed differing levels of concern. Businesses raised their year-ahead inflation forecast to 5.9 percent, exceeding the BSP’s four percent upper tolerance limit, citing geopolitical tensions, higher energy costs, supply constraints and peso depreciation. Consumers, meanwhile, expect inflation to average 3.3 percent over the next year, up from 2.7 percent, slightly above the BSP’s three percent target but still within its two to four percent target range.
Both surveys also showed expectations of higher borrowing costs. Consumers anticipate inflation, interest rates and unemployment to rise while expecting further peso depreciation over the coming quarters. Businesses likewise expect higher borrowing rates, although they see the peso eventually appreciating over the next 12 months. The BES covered 502 firms nationwide from May 5 to 31, while the CES polled 5,503 households from April 6 to 18.
