Business pessimism increased in the first quarter of the year because of concerns on recession in many advanced economies, according to a quarterly survey conducted by the Bangko Sentral.

More firms expect the peso to weaken and inflation and interest rates to go up in the first and second quarters of the year .

Respondents cited competition, weak demand and financial problems as key risks to business activity.

The central bank conducted the first quarter business expectations survey from Jan. 5 to Feb. 11, when the International Monetary Fund further lowered its growth projections.

The survey covered 1,410 companies and had a response rate of 75.3 percent.

The central bank said the employment outlook of businesses remained negative as the number of companies with expansion plans declined.

?The employment outlook was weighed down largely by the negative sentiment of manufacturing firms. This indicated that more firms are not planning to hire new workers in the second quarter. Consistent with this development is the marked decline in the number of firms that expressed expansion plans in the next quarter,? the central bank said.

Companies across all sectors expressed less confidence when it comes to their own business operations, in line with their sentiment on the macroeconomy.

More companies expect difficulties in tapping credit as the access index slid further into negative territory for the third consecutive quarter. As a result, more firms said they would be less liquid, with many noting of delays in the payment of orders as reason for their deteriorating outlook.

The central bank said all sectors, except for the construction sector, were bearish about the macroeconomic environment.

The construction sector is still upbeat but such optimism is waning because of concerns about a slowdown in high-rise condominiums and other projects because of the downturn.

The industry sector was the most pessimistic because of expectations of weak customer demand from layoffs and the reduction in disposable income given the fragile economic environment. Eileen A. Mencias