THE INFLATION rate is one of the critical economic indicators that businessmen, analysts and consumers monitor, but other numbers are equally important to consider in the overall assessment of how the economy is faring.
Some positive numbers of late, in fact, are emerging that tend to show that the high inflation rate of 6.4 percent registered in August is just a blip that will fade away in the medium-term period. One should remember that, while the economy grew at a slower clip of six percent in the second quarter of the year, the gross domestic product expanded by an average of 6.3 percent in the first two quarters, still one of the fastest in Asia.
The Philippine Statistics Authority just last week released the unemployment rate data for July, showing a decline to 5.4 percent from 5.6 percent in the same month in 2017. The labor force, according to the PSA, added nearly half-a-million workers this year.
The National Economic and Development Authority said the unemployment rate of 5.4 percent was one of the lowest recorded for all surveys conducted in the July rounds since 2008. The Labor Force Survey of the PSA consequently showed that the employment rate improved to 94.6 percent in July, from 94.4 percent in the same month last year. The Philippines, thus, recorded a net employment of 488,000, bringing total employment to 40.7 million in July.
Socioeconomic Planning Secretary Ernesto M. Pernia said an average of 1.17 million additional employment was created so far in the first three rounds of the Labor Force Survey, expressing confidence that the government was on track to meet its target of 900,000 to 1.1 million jobs to be generated in 2018. The services sector accounted for over half of the country’s total employment, contributing more than 1.1 million jobs.
More employment means increased purchasing power for consumers, which, in turn, creates demand and gives companies the signal to expand.
The industry sector recorded a positive employment growth of 2.2 percent, or 172,000 additional employment. The manufacturing sector among the industry subsectors contributed the largest employment during the period. The trend is consistent with the strong expansion plans of manufacturing firms as a result of a more positive employment outlook for the period.
The employment outlook in the fourth quarter has also turned more bullish, with companies signifying their intention to hire new employees, according to the results of the Business Expectation Survey conducted by the Bangko Sentral ng Pilipinas. The employment index for the next quarter improved to 26.3 percent from 24.9 percent in the last quarter’s survey.
The positive reading, according to the Central Bank, indicates that more companies will continue to hire new employees than those that said otherwise. The Bangko Sentral conducted the third-quarter Business Expectations Survey from July 2 to Aug. 29 covering 1,466 companies nationwide.
The outlook of firms on their hiring intentions was more optimistic in the services and wholesale and retail trade sectors and steady in the industry. The same Central Bank survey showed that the percentage of businesses with expansion plans in the industry sector for the fourth quarter rose to 36.1 percent, from 34.2 percent a quarter ago. This indicates more employment opportunities for Filipinos in the coming quarters.
Among subsectors, the agriculture, fishery and forestry, electricity, gas and water, and manufacturing recorded stronger expansion plans, while those of mining and quarrying were understandably lower from a quarter ago.
The country’s gross international reserves (GIR), meanwhile, increased to $77.83 billion at the end of August from $76.72 billion a month ago, indicating that the Philippines has enough foreign exchange supply to pay its foreign obligations and counter speculative trading.
The end-August 2018 level of the GIR is equivalent to 7.5 months’ worth of imports of goods, and payments of services and primary income. It is also equivalent to 6.2 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity, the Central Bank said.
Another positive economic indicator is the high level of foreign direct investments we are receiving. Net inflows of foreign direct investments in May jumped 143 percent to $1.6 billion, from $677 million a year ago, a reflection of investors’ confidence in the Philippine economy.
With all these positive data, we can say that the Philippine economy has become resilient and kept its fundamentals despite adversities and the turbulence in the world market. As I’m saying in this column, there is no cause for panic. We just have to relax, but be alert at the same time.
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This piece first came out in Business Mirror on Sept. 25, 2018 under the column “The Entrepreneur.” For comments/feedback e-mail to: mbv.secretariat@gmail.com or visitwww.mannyvillar.com.ph./PN
