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Business expected to remain contractionary despite improved outlook

29 Jun 2020 / 12:28 H.

PETALING JAYA: Business sentiment among Malaysia companies have improved slightly despite remaining in the contractionary zone in Q3’20, according to Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study.

According to its study, BOI fell on a year-on-year (yoy) basis BOI fell by 20.55 percentage points from 7.22 percentage points in Q3’19 to -13.33 percentage points in Q3’20.

Quarter-on-quarter (qoq), the index improved by 8.53 percentage points from -21.86 to -13.33 percentage points.

Dun & Bradstreet Malaysia Sdn Bhd CEO Audrey Chia commented with the gradual resumption of economic activities and interstate travels, it is expecting sentiments to improve slightly in the months ahead.

“The government’s fiscal and monetary stimulus packages will help stimulate economic growth, with some expected recovery towards the end of the second half of 2020,” she said in a report.

“However, growth across the majority of sectors is expected to remain muted, with continued contractions seen in services, wholesale trade and manufacturing.”

The six business indicators under the quarterly BOI study include volume of sales, net profits, selling price, inventory level, employees and new orders.

On a yoy basis, all six indicators have fallen for the quarter.

Volume of sales plunged from 2.50 percentage points reported previously to -19.20 percentage points, net profits fell from -5 percentage points previously to -22.40 percentage points and selling price plunged to -7.20 percentage point from +9.17 percentage points.

Similarly, 3Q’19 saw new orders drop to -12 percentage points from +25.83 percentage points previously, inventory levels plunged from +5 percentage points to -8.8 percentage points and employment levels tumbled from +5.83 percentage points to -10.4 percentage points.

Moving forward, D&B noted that the financial and mining sectors are most upbeat while the services, manufacturing and wholesale trade sectors are most pessimistic for the third quarter of this year.

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