Business optimism sinks to survey low in IndiaChristian Fernsby ▼ | November 13, 2019
Business confidence among private sector companies in India is down in October, with sentiment towards output, profitability and capital spending (capex) at their lowest levels since comparable data became available in late-2009.
Asian economy Degrees of optimism are below their respective emerging market averages
Concurrently, firms foresee broadly muted non-staff cost inflation and have revised down their projections for selling charges accordingly.
At +14% in October, down from +15% in June, the business activity net balance is at its lowest mark since composite data were first available in October 2009 and compares with a reading of +19% for developing countries.
Moreover, downward revisions to growth projections are evident in India’s manufacturing and service sectors, with the respective net balances falling to +14% and +13%.
Survey participants cite several threats to the outlook, including regulation, fierce competition, unresponsive demand, subdued global conditions, unfavourable exchange rates, infrastructure issues, automobile sector weakness and environmental concerns.
Where expansion is anticipated, companies hope for better demand conditions, currency stability and a more favourable market scenario.
Some firms also India business activity expectations indicate that acquisitions, better use of online portals, innovation, urbanisation and marketing efforts are all potential sources of growth.
In line with predictions of softer growth in the coming 12 months, Indian companies have revised lower their hiring, capex and research and development (R and D) intentions.
On the employment front, a net balance of +7% of firms foresees job creation.
This is the lowest figure in over two-and-a-half years but matches the global average.
Employment projections have weakened in both the manufacturing and service sectors.
While capex is predicted to expand, the aggregate level of confidence is down to its lowest since comparable data became available, below both the global and emerging markets averages.
Indian service providers are slightly more optimistic regarding capital spending than goods producers.
Meanwhile, private sector companies turned pessimistic towards R and D, with the net balance of -5% the lowest globally.
Negative sentiment is noted across the manufacturing and service economies. ■