Business sentiment in the Philippines improved in February 2026, before the onset of the ongoing war in the Middle East, according to the latest survey.
The current-month confidence index rose to 8.2 percent from 0.9 percent in January, indicating that more businesses were optimistic than pessimistic.
Firms cited stronger demand for goods and services, better domestic economic conditions, and improved investor confidence—supported by higher government infrastructure spending and governance reforms—as key reasons for the improved outlook.
Businesses were also more upbeat about the near and long term. The three-month outlook for May 2026 increased to 37.4 percent, while the year-ahead outlook jumped to 51.1 percent.
Companies expect higher consumer demand during the summer season, stable inflation, favorable weather, and continued public spending. For the next 12 months, firms anticipate stronger seasonal demand, improved efficiency, and better economic prospects.
While firms reported a slightly improved cash position, access to credit became tighter in February. At the same time, average capacity utilization in industry and construction declined to 67.2 percent, reflecting fewer firms operating at high capacity.
Key challenges identified by businesses included strong competition, weak demand, and high interest rates.
Hiring expectations improved for both the next three months and the coming year. However, fewer firms—particularly in the industrial sector—said they plan to expand operations over the same periods.
Businesses expect the peso to strengthen slightly in the short term but weaken over the next year. Borrowing costs are seen to ease in the near term but rise later.
Inflation expectations remain moderate, projected at 2.3 percent in February, 2.5 percent in May, and 2.7 percent over the next 12 months—within the central bank’s target range.
The survey was conducted from February 5 to 28, 2026, covering 502 firms nationwide. Results provide an early indication of trends in business activity and economic conditions.
