Businesses show uptick in optimism with expanding orderbooks and rising prospects of profitability

The Dun & Bradstreet Business Optimism index marginally increased by 0.2% in Q3 2023

Mumbai, 21^st August, 2023: The Dun & Bradstreet Composite Business Optimism Index stands at 70.0 for Q3 2023, 0.2% higher than Q3 2022. Two out of the six optimism indices have registered an increase. The Dun & Bradstreet Composite Business Optimism Index, which has been measuring the changing business sentiment of India Inc. since 2002, is a leading indicator for India’s overall growth, with a correlation co-efficient of around 80% with the Gross Domestic Product (GDP).

Highlights

• Optimism for new orders stands at 55% in Q3 2023, 15 percentage points higher than Q3 2022.
• Optimism for net profits stands at 42% in Q3 2023, 8 percentage points higher than Q3 2022.
• Optimism for volume of sales stands at 62% in Q3 2023, depicting marginal improvement on a q-o-q basis.
• Optimism for number of employees stands at 46% in Q3 2023, lowest in eight quarters.
• Optimism for level of selling prices stands at 32% in Q3 2023, lowest in nine quarters.
• Basic goods sector is the most optimistic for new orders, net profits and expected level of stock.

Dun & Bradstreet's Composite Business Optimism Index:  Q3 2003 – Q3 2023

Note: BOI Index is for new base (2011)

Arun Singh, Global Chief Economist, Dun & Bradstreet said, “Business optimism has come out marginally positive in Q3 2023, which is indicative of the resilience within the Indian economy amid recessionary headwinds in the global economy. The growth momentum in the economy is cushioned with sufficient domestic demand and stronger than expected investment resulting in positive sentiments, anticipating order book expansion. Our survey also indicates that firms are relatively optimistic about profitability and reduced inventory levels. Despite the inflationary environment, firms are hesitant to pass on the cost burden to end consumers due to higher competition. However, relatively moderate performance of India Inc. has lowered the confidence for fresh hiring among employers. Overall, the economy appears to be at an inflection point, where upcoming macroeconomic indicators are likely to decide business performance in the upcoming quarter”

Key findings from the Q3 2023 survey

62% of the respondents expect volume of sales to increase in Q3 2023 compared to 69% in Q3 2022, a decrease of seven percentage points. While 28% expect it to remain unchanged, 10% expect the volume of sales to decline.

42% of the respondents expect an increase in net profits in Q3 2023 compared to 34% in Q3 2022, an increase of seven percentage points. 47% expect net profits to remain unchanged, while 11% expect it to decrease.

32% of the respondents expect the selling price of their products to increase during Q3 2023, registering a decline of five percentage points compared to Q3 2022. 56% of the respondents expect no change while 12% expect a decline in the selling price of their products in Q3 2023.

55% of the respondents expect their order book position to improve in Q3 2023, compared to 40% in Q3 2022, an increase of fifteen percentage points. While 38% of the respondents expect new orders to remain unchanged, 7% anticipate new orders to decrease.

35% of the respondents expect their inventory level to increase during Q3 2023, registering decline of ten percentage points with respect to Q3 2022. While 50% anticipate no change in inventory level, 15% expect inventory level to decline.

46% of the respondents expect an increase in the size of their workforce employed during Q3 2023 compared to 53% in Q3 2022. While 47% anticipate no change in the number of employees, 7% expect their workforce size to decline.