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NEWS UPDATES Asean Affairs  15 October 2010

Strong Philippines peso cuts jobs

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Philippine firms are not hiring more people in the fourth quarter because of the expected drop in sales due to a strong peso, according to a survey by Dun & Bradstreet (D&B).

Victor Abola, economist at the University of Asia and the Pacific said Filipino businessmen were still planning to hire, but this was down from 20 percent in the third quarter.

He said the employment expectations were projected to drop by 6 percent from the third quarter.

"All sectors, except one, were slowing down their pace of the increase in their employees," Abola said, adding that employment level expectations nonetheless were all in the green.

He said that it was in the construction and retail sectors where new job generation for the fourth quarter was stronger than the previous quarter.

Consumer goods manufacturers had the lowest expectations about new hires.

The same survey showed that profitability is expected to rise 13 percent to reach 63 percent in the fourth quarter with five out of eight sectors seeing hefty improvements in their profit outlook.

Abola said the heightened view of profits for the coming quarter is an additional reason to be optimistic, since this will encourage firms to expand their output in 2011.

He, however, said that the better net profit view was premised on higher sales volumes, since the index of selling price saw a significant fall from 7 percent in the third quarter to zero for the fourth quarter.

The negative selling price index was strongly driven by the 30 percent drop in the services sector and non-durable manufacturers.

D&B said these two sectors are much affected by the recent sharp appreciation of the peso, since business process outsourcing (BPO) firms and exporters usually have contracts stated in US dollars.

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