EFFECTS OF ECONOMIC INDICATORS ON THE PROFITABILITY OF SERVICE INDUSTRY

Abstract

The purpose of this study is to determine the significant effects of various economic indicators like interest rate, inflation, unemployment rate, foreign exchange rate and gross domestic product to the profitability of service industry listed in Philippine Stock Exchange. Based on the results, there is a strong effect between the economic indicators as a whole to the profitability of service companies. The specific economic indicators that have effect on the profitability are interest rate, inflation, unemployment rate and foreign exchange rate. Interest rate has a strong negative effect; inflation has moderate negative effect; unemployment rate has weak negative effect; and foreign exchange rate has strong positive effect on profitability. Only gross domestic product is the economic indicator that has no effect on profitability. This study recommends to increase stakeholder’s awareness and company’s competitiveness to enable them to control the future.

Keywords: economic indicators, profitability, service industry