"Business sentiments continue to be buoyant in the third quarter and (that it would) surge in the fourth quarter," Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said, quoting the latest results of the BSP-Business Expectations Survey (BES).

Guinigundo said the latest BES noted an all-time high employment confidence of respondents due to expanding operations of companies, which would require additional employees.

In the meantime business activity is expected to surge in the fourth quarter, according to the survey. "Behind this optimism was the respondents’ more positive view of fourth quarter macroeconomic conditions due to a generally stable macroeconomic environment, increased remittances from overseas Filipinos, solid performance of Asian economies; the holiday season and the new and enhanced business strategies," the BES noted.

For the third quarter, the BES said business sentiments are slightly more cautious because of the following: the slackening of production for the period due to seasonality; possible slowdown in the US economy due to problems in the housing market; competition of cheap imports mostly from China; and lastly, power and water shortage.

According to the BES, the overall business confidence index (CI) for the current quarter remained at the 40 percent mark for the fourth consecutive quarter at 40.9 percent, up by 19.2 index points compared to the year-ago level. Quarter-on-quarter, however, the index fell by 5.5 points. This quarter-onquarter trend was consistent with the perception during the second quarter survey that the third quarter index would be slightly lower compared to the second quarter.

For the fourth quarter, respondents expected that business activity would surge as the index climbed to 53 percent, the highest level since the survey was first conducted in the second quarter of 2001.

During the quarter in review, respondents from the NCR (National Capital Region) were more bullish than their counterparts from the AONCR (Areas Outside the NCR).

Except for the construction sector, the sectoral sentiments on the macroeconomy in the current quarter generally tracked that of the overall sentiment as indices were on the uptrend, year-on-year, but lower quarter-on-quarter. Optimism in the construction sector, meanwhile, peaked at an alltime high of 53.1 percent in the third quarter, the survey said.

In the meantime sentiment in the services sector remained strong at 53.3 percent. Respondents from the financial intermediation sub-sector registered the highest confidence level at 61.3 percent. The outlook for the industry sector inched up year-on-year at 35.6 percent, but was lower quarter-on-quarter. Specifically, manufacturing firms noted that production during the third quarter traditionally slackens quarter-on-quarter due to the start of the wet season and the slowdown in consumer spending after the enrollment period. The CI for the wholesale and retail trade sector declined marginally at 35.1 percent.

On the other hand the BES said the access to credit index increased to 10.4 percent, indicating an improvement in the availability of lending facilities as perceived by respondents. This trend is consistent with data on outstanding loans granted by banks, which has been on the uptrend since July 2006. The financial condition index, though still in the negative territory, eased to -5.1 percent.

"This indicated that firms’ cash positions are becoming generally more liquid. The employment outlook index for the next quarter rose to reach an all-time high at 21.1 percent, indicating that respondents are optimistic about employment conditions," the survey said. The employment outlook was particularly strong for the construction and services sectors.

The third quarter BES was conducted from July 9 to August 10. A total of 1,063 firms nationwide were surveyed. They were drawn from the Securities and Exchange Commission 2005 Top 5,000 Corporations as follows: 477 companies in NCR and 586 firms in AONCR, covering all 17 regions nationwide.