Mumbai, November 13, 2017: The Dun & Bradstreet Composite Business Optimism Index stands at 76.7 during Q4 2017, an increase of 6.4% as compared to Q3 2017. However, it decreased by 4.1% as compared to Q4 2016. Based on the responses received, three out of the six optimism indices have registered an increase as compared to Q3 2017.
D&B's Composite Business Optimism Index: Q2 2001 – Q4 2017
“The Dun & Bradstreet Composite Business Optimism Index has improved during Q4 2017 as compared to previous quarter. It appears that the initiatives taken by the government, and improvement in some macroeconomic indicators have allayed some concerns of economic slowdown. Specific events that have helped optimism levels are government policies to help small enterprises and exporters on GST, the festive season demand and recent hike in pay scales to teachers and academic staff. The supply disruptions arising from GST rollout is also anticipated to reverse gradually as the companies adapt to the new system after enduring the initial glitches” said Manish Sinha, Managing Director – India, Dun & Bradstreet. “Going forward, the reform agenda of the Government should continue uninhibited. However, it is the pace of implementation of these initiatives that would continue to instill optimism amongst the companies as it would indicate that the government remains committed to reinforce the growth momentum of the economy.” he added.
Around 71% of the respondents expect volume of sales to increase in Q4 2017 compared to around 79% in Q4 2016, a decrease of 8 percentage points. While around 20% expect it to remain unchanged, around 9% expect the volume of sales to decline.
Around 56% of the respondents expect an increase in net profits in Q4 2017, compared to around 65% in Q4 2016, a decrease of 9 percentage points. Around 32% expect net profits to remain unchanged, while around 12% expect it to decrease.
Around 52% of the respondents expect no change in the selling price of their products for Q4 2017. Around 37% of the respondents expect the selling price of their products to increase during Q4 2017, while around 11% expect a decline.
Around 65% of the respondents expect their order book position to improve in Q4 2017, compared to around 71% in Q4 2016. While around 27% of the respondents expect new orders to remain unchanged, around 8% anticipate new orders to decrease.
29% of the respondents expect an increase in the size of their workforce employed during Q4 2017, as compared to 36% in Q4 2016. While 63% anticipate no change in the number of employees, the remaining 8% expect their workforce size to decline.
28% of the respondents expect their inventory level to increase during Q4 2017, as compared to 25% in Q4 2016. While 57% anticipate no change in inventory level, 15% expect inventory level to decline.
The D&B Business Optimism Index is widely recognised 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.
The survey is conducted on a sample of companies that are selected randomly from D&B’s commercial credit file. The sample selected is a microcosmic representation of the country’s business community and includes companies from several sectors including basic goods, capital goods, intermediate goods, consumer durables, consumer non-durables and service sectors. All the respondents in the survey are asked six standard questions regarding their expectations as to whether the following critical parameters pertaining to their respective companies will register an increase, decline or show no change in the ensuing quarter as compared to the same quarter in the prior year: Volume of Sales, Net Profits, Selling Prices, New Orders, Inventories and Employees. The individual indices are then calculated by the percentage of respondents expecting an increase.
For calculating the Composite Business Optimism Index, each of the five parameters (excluding inventory) is assigned a weight. The positive responses for every parameter for the period under review are expressed as a proportion of positive responses in the base period (2011). The parameter weights are then applied to these ratios and the results aggregated to arrive at the Composite Business Optimism Index.