Business optimism in India at near 8-year high: Report

Data shows that business optimism for the fourth quarter of this calendar year is the highest since the second quarter of the calendar year 2014 with the construction sector most optimistic on the level of the selling price, inventory levels, and hiring of employees.

The Dun & Bradstreet Composite Business Optimism Index (BOI) for Q4 2021 stands at 94.6, up 27.4% compared to the Q3 2021 survey. Data shows five out of six optimism indices have registered an increase as compared to Q3. Arun Singh, Global Chief Economist at Dun & Bradstreet says the GDP growth during the October-December quarter of 2021 is likely to be strong as the BOI has surged to an almost eight-year high.

The survey shows that around 79% of the respondents expect the volume of sales to increase in Q4 2021, compared to 67% the quarter before. 62% of the respondents expect an increase in net profits in Q4 2021, compared to 48% in the quarter before.

“The consumption boost to India Inc., from easing lockdown restrictions, pent-up and festive demand, arrears payment of dearness allowances along with improving consumer confidence levels, are quite evident from the optimism for new orders which has climbed to the highest level since Q3 2014,” Singh added.

49% of the survey’s respondents expect an increase in the size of their workforce employed during Q4 2021 while 45% anticipate no change. 6% of the respondents expect their workforce size to decline.

Singh says that the sustenance of the optimism level of businesses depends on how inflationary pressures and the supply situation is managed. “Sustenance of the optimism level of businesses, however, depends on how effectively domestic supply challenges are managed and inflationary pressures are controlled. As prices, in general, are expected to go up driven by supply disruptions and rising commodity prices, both consumer spending and corporate earnings are at risk.”

Some other key findings:
· Optimism for the volume of sales stands at 79%, highest in three quarters

· Optimism for new orders stands at 79%, highest since Q3 2014

· Optimism level for net profit stands at 62%, highest in three quarters

· Optimism for the level of inventory stands at 38%, lowest in three quarters

· Optimism for selling price stands at 49%, highest since Q2 2012

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