Just on the eve of big budget 2009, the Dun & Bradstreet Composite Business Optimism Index brought some optimism. For the Q3 of the calendar year 2009, it recorded an increase of as much as 40.8% (q-o-q), inched up to 132.1 after touching an all-time low of 93.8 in Q2 2009.
Although the BOI has witnessed a significant increase compared to the previous quarter, the index remains below the last year's level. On a y-o-y basis, the BOI for Q3 2009 recorded a marginal decrease of 3.3 per cent.
Based on the responses received, it was observed that five out of the six optimism indices – namely, volume of sales, net profits, selling prices, new orders, and employee levels have registered an increase as compared to the previous quarter. Only one out of the six optimism indices – inventory levels – declined by 2 percentage points as compared to the previous quarter.
Demand conditions are expected to witness some improvement during Q3 2009, with as many as 72% of the respondents anticipating an increase in sales volume. While about 19% of the respondents expect volume of sales to remain unchanged, around 9% of the respondents anticipate a decrease in sales during Q3 2009. The resultant optimism for volume of sales stands at 63%, an increase of 40 percentage points as compared to the previous quarter.
Profit expectations of the Indian corporates improved substantially, with as many as 69% of the respondents expecting an increase in their net profits during the forthcoming quarter.
While about 10% of the respondents are anticipating a fall in their net profits in the forthcoming quarter, about 21% of the respondents expect no change in net profits during the Jul-Sep 09 quarter. The resultant Optimism for net profits stands at 59%, an increase of as much as 41 percentage points as compared to the previous quarter.
"The improvement witnessed in the business optimism during Q3 2009 indicates that the worst may be behind us. As the Composite BOI is still below the Q3 2008 level, it suggests that it would take some more time for the economy to recover completely. Positive data releases, improving investment sentiment along with the post-election optimism seem to have provided the much needed support to corporate confidence," said Kaushal Sampat, Chief Operating Officer, Dun & Bradstreet – India.
The majority of respondents anticipate no change in the size of the workforce employed during Q3 2009. Approximately 57% of the respondents intend to keep the number of employees unchanged. While 38% of the respondents expect an increase in the number of employees, 5% expect a decline. The resultant Optimism for Employees stands at 33% for the Jul-Sep 09 quarter, an increase of around 20 percentage points as compared to the previous quarter.
The D&B Business Optimism Index is considered as an indicator, which measures the pulse of the business community and serves as a reliable benchmark for investors. The index is arrived at on the basis of a quarterly survey of business expectations.