Malaysian businesses remain moderately upbeat in Q amid global uncertainties

Transcription

1 FOR IMMEDIATE RELEASE Eugene Z., Marketing Communications Malaysian businesses remain moderately upbeat in Q amid global uncertainties Majority of local firms have anticipated business investments to remain unchanged for 2017 D&B Malaysia Quarterly Business Optimism Index Kuala Lumpur, 09 January 2017 Business confidence in Malaysia remains upbeat despite signs of downward moderation in Q According to Dun & Bradstreet (D&B) Malaysia s Business Optimism Index (BOI) study, overall BOI has remained in the expansionary region, slipping for the third consecutive quarter, from percentage points in Q to percentage points in Q On a year-on-year (y-o-y) basis, BOI fell moderately from percentage points in Q to percentage points in Q The six business indicators under the quarterly BOI study include volume of sales, net profits, selling price, inventory level, employees and new orders. This is the 16 th D&B BOI study being released in Malaysia. 40 B O I S C O R E Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Figure 1. Overall Business Optimism Index (Q Q1 2017)

2 Point Commentary According to D&B Malaysia, 4 of six indicators have moderated downwards while 2 indicators have improved in Q on a quarter-on-quarter (q-o-q) basis. Both net profits and employment levels have fallen into the negative territory q-o-q. Net profits fell from +7.0 percentage points in Q to percentage points in Q while employment slipped from percentage points in Q to percentage points in Q Volume of sales moderated downwards visibly from +7.0 percentage points in Q to percentage points in Q New orders have similarly declined from percentage points in Q to percentage points in Q Meanwhile, both selling price and inventory levels have improved q-o-q. Selling price rose from percentage points in Q to percentage points in Q Inventory levels jumped from percentage points in Q to percentage points in Q On a year-on-year (y-o-y) basis, only 2 of six business indicators have improved for Q Volume of sales declined from percentage points in Q to percentage points in Q Net profits fell from percentage points in Q to percentage points in Q New orders moderated strongly downwards from percentage points in Q to percentage points in Q Employment levels slipped into the contractionary zone from +2.0 percentage points in Q to percentage points in Q Selling price and inventory levels have increased y-o-y. Selling price climbed from percentage points in Q to percentage points in Q Inventory levels rose from percentage points in Q to percentage points in Q Sectoral Outlook The agricultural sector has emerged as the most optimistic sector with 6 indicators in the expansionary region. The strong showing follows an optimistic preceding quarter where 5 of six indicators were in the positive region. According to D&B Malaysia, 2 of six indicators have climbed upwards for Q Both volume of sales and net profits have remained optimistic at percentage points in Q Selling price jumped markedly from percentage points in Q to percentage points in Q Inventory levels have rebounded from the contractionary zone, from percentage points in Q to percentage points in Q New orders registered percentage points while employment levels registered percentage points in Q The transportation sector has also emerged as one of the most optimistic sectors with 5 indicators in the positive region. Of the six business indicators, 3 indicators have improved moderately. Employment levels and new orders have increased from 0 percentage point in Q to +5.0 percentage points in Q respectively. Selling price climbed from 0 percentage point in Q to percentage points in Q Both volume of sales and net profits have moderated downwards slightly from percentage points in Q to +5.0 percentage points in Q Inventory levels have remained unchanged at 0 percentage point in Q

3 The construction sector has also remained relatively upbeat for Q with 4 indicators in the expansionary zone. Volume of sales is expected to remain optimistic at percentage points in Q Both selling price and inventory levels are anticipated to increase from 0 percentage point in Q to percentage points in Q respectively. New orders have remained at percentage points in Q Net profits moderated downwards strongly from percentage points in Q to 0 percentage point in Q Employment levels slipped from percentage points in Q to 0 percentage point in Q The services sector has also remained optimistic for Q with 4 indicators in the expansionary zone. However, 2 of six indicators have fallen into the contractionary zone. Volume of sales has moderated from percentage points in Q to percentage points in Q New orders have jumped visibly from percentage points in Q to percentage points in Q Both selling price and inventory levels have rebounded into positive territory from percentage points in Q to percentage points in Q and from percentage points in Q to percentage points in Q Meanwhile, both net profits and employment levels have fallen into the contractionary zone. Net profits slipped from percentage points in Q to percentage points in Q while employment dropped from percentage points in Q to percentage points in Q As with Q4 2016, both wholesale and mining sectors have remained the least optimistic sectors for Q Business sentiments within the wholesale sector have remained downbeat with 3 of six indicators in the contractionary zone. Both volume of sales and net profits were in the negative territory for 7 consecutive quarters. Volume of sales deteriorated further from percentage points in Q to percentage points in Q Net profits fell from percentage points in Q to percentage points in Q New orders dropped into the contractionary zone from percentage points in Q to percentage points in Q Employment levels are expected to remain unchanged at 0 percentage point in Q Both selling price and inventory levels have improved from 0 percentage point in Q to percentage points in Q and from percentage points in Q to percentage points in Q respectively. The mining sector is the least optimistic sector with only 1 of six indicators in the positive territory. 5 of six indicators have slipped into negative territory for Q Volume of sales, new orders, inventory levels and employment have fallen from 0 percentage point in Q to percentage points in Q Net profits have deteriorated from 0 percentage point in Q to percentage points in Q Selling price has increased from 0 percentage point in Q to percentage points in Q

4 The overall outlook for 2017 appears to be cautiously optimistic as majority of the firms have anticipated investments for business expansion to remain unchanged. According to D&B Malaysia, 71 per cent of Malaysian businesses surveyed have expected investments to remain unchanged. The proportion of firms which has expected investments to increase stands at a minority of 8 per cent. The remaining firms have anticipated a reduction in investments at 21 per cent. Investment for Business Expansion in % Increase Decrease Unchanged 21% 71% Figure 2. Investment for Business Expansion in 2017 D&B Malaysia notes that the most important area of investment for 2017 is in machinery and capital equipment which accounts for 31 per cent of surveyed companies. Skills upgrading of employees accounts for the second most important area of investment for 2017 at 24 per cent. Investments in marketing and brand development are the third most important area of investment for 2017 at 23 per cent. Firms have also highlighted new product development (11 per cent), research and development (2 per cent), mergers and acquisitions (2 per cent) and IT infrastructure (1 per cent) as important areas of investments in Most Important Area of Investment in 2017 Others New Product Development Marketing & Brand IT Infrastructure Mergers & Acquisitions Skills Upgrading of Employees R&D Machinery & Capital Machinery & Capital Equipment R&D Skills Upgrading of Employees Mergers & Acquisitions IT Infrastructure Marketing & Brand Development New Product Development Others 0% 10% 20% 30% 40% Figure 3. Most Important Area of Investment for 2017

5 Global economic uncertainties have been highlighted as the main challenge in 2017 facing local firms, accounting for 53 per cent of the firms being surveyed. Higher business costs accounted for the second major challenge for businesses at 27 per cent. Reduced sales were the third main challenge for businesses at 11 per cent. Firms have also expected the lack of financing (4 per cent) and increased competition (4 per cent) to be key challenges in Main Challenge for 2017 Incresed Lack of Financing Competition 4% 4% Others 1% Higher Business Cost 27% Global Economic Uncertainties 53% Reduced Sales 11% Figure 4. Main Challenge in 2017 Supporting Quotes The overall sentiments among the Malaysian business community for Q have been relatively tepid compared to the preceding quarters as downside risks to growth have risen. Externally-oriented sectors such as wholesale trade will continue to face headwinds with softening exports. However, we expect the ongoing infrastructure projects within the construction and transportation sectors to offset the weakness in other sectors and provide modest growth support in the coming months. Moving into 2017, we are expecting Malaysian businesses to err on the side of caution in their investment decisions for expansion plans. Global economic uncertainties, higher business costs and reduced sales are some of the key challenges which have been highlighted by local firms. Ms. Audrey Chia Chief Executive Officer Dun & Bradstreet (Malaysia) Sdn. Bhd.

6 Agriculture Overview of Business Indicators Net Profits Net profits fell into the contractionary region to percentage points in Q (net +7.0 percentage points in Q4 2016). As with Q4 2016, the agricultural sector is most optimistic (net percentage points). This is followed by financial (net percentage points) and transportation (net percentage points) sectors. The construction sector (net 0 percentage point) has anticipated net profits to remain unchanged. The remaining sectors are downbeat about net profits for Q (net percentage points), (net percentage points), (net percentage points) and (-7.79 percentage points). 50% 40% Net Profit 30% 20% 10% BOI Q1,2017 BOI Q4,2016 BOI Q3,2016 0% -10% BOI Q2,2016 BOI Q1, % -30% -40% -50% Figure 1. Net Profits Optimism Score, Q Q Volume of Sales Volume of sales moderated downwards to percentage points in Q (net +7.0 percentage points in Q4 2016). As with the previous quarter, the agricultural sector (net percentage points) is most upbeat about volume of sales. This is followed by the construction (net percentage points), services (net percentage points) and transportation (net +5.0 percentage points) sectors. The financial sector (net 0 percentage point) has expected volume of sales to remain unchanged. Meanwhile, the mining (net percentage points), wholesale (net percentage points) and manufacturing (net percentage points) are downbeat about volume of sales.

7 Agriculture Agriculture 50% 40% 30% 20% 10% Volume of Sales BOI Q1,2017 BOI Q4,2016 BOI Q3,2016 BOI Q2,2016 BOI Q1,2016 0% -10% -20% -30% Figure 2. Volume of Sales Optimism Score, Q Q Selling Prices Selling prices increased significantly to percentage points (net percentage points in Q4 2016). The agricultural sector (net percentage points) is most optimistic, followed by mining (net percentage points), wholesale (net percentage points), construction (net percentage points), manufacturing (net percentage points) and transportation (net percentage points). The services sector (net percentage points) is marginally optimistic while the financial sector (net percentage points) is downbeat about selling prices. 100% 80% Selling Price 60% 40% 20% 0% BOI Q1,2017 BOI Q4,2016 BOI Q3,2016 BOI Q2,2016 BOI Q1, % -40% -60% Figure 3. Selling Price Optimism Score, Q Q New Orders New orders continued to moderate downwards to percentage points in Q (net percentage points in Q4 2016). The agricultural sector (net percentage points) is most optimistic, followed by services (net percentage points), construction (net percentage points) and transportation (net +5.0 percentage points) sectors. The remaining sectors are pessimistic about new orders wholesale (net percentage points), mining (net percentage points), financial (net percentage points) and manufacturing (net percentage points).

8 Agriculture Agriculture New Orders ( Sectors) 50.00% 40.00% 30.00% 20.00% BOI Q1,2017 BOI Q4, % BOI Q3, % BOI Q2,2016 BOI Q1, % % % Figure 4. New Orders ( Sectors) Optimism Score, Q Q Employment Employment has slipped into the contractionary zone to percentage points in Q (net percentage points in Q4 2016). The agricultural sector (net percentage points) is most optimistic, followed by transportation (net +5.0 percentage points) and manufacturing (net percentage points). Both construction and wholesale sectors have anticipated employment to remain unchanged (net 0 percentage point). The financial (net percentage points), mining (net percentage points) and services (net percentage points) sectors are least optimistic about employment. 25% 20% Employment 15% 10% 5% 0% BOI Q1,2017 BOI Q4,2016 BOI Q3,2016 BOI Q2,2016 BOI Q1,2016-5% -10% -15% -20% -25% Figure 5. Employment Optimism Score, Q Q1 2017

9 Agriculture Inventory Levels Inventory levels have increased moderately to 3.47 percentage points in Q (net +0.5 percentage points in Q4 2016). The agricultural sector (net percentage points) is most optimistic, followed by construction (net percentage points), wholesale (net percentage points), manufacturing (net percentage points) and services (net percentage points). The remaining sectors are pessimistic about inventory levels mining (net percentage points) and financial (net percentage points). Meanwhile, the transportation sector (net 0 percentage point) has anticipated inventory levels to remain unchanged. 100% Inventory 80% 60% 40% 20% BOI Q1,2017 BOI Q4,2016 BOI Q3,2016 BOI Q2,2016 0% -20% -40% Figure 6. Inventory Optimism Score, Q Q Commentary D&B Business Optimism Index (BOI) was first released in Malaysia in April 2013.This is the 16 th D&B Business Optimism Index (BOI) being released in Malaysia. The D&B Business Optimism Index (BOI) is a measure of business confidence in the economy. Released quarterly, it is based on a business sentiment survey that is designed to capture business expectations and is one of the most effective ways to track how the business community perceives the business environment, and where they think it is moving. This is commonly used, worldwide, to assist in analyzing major trends and issues concerning the business community through tracking business parameters including net profits, selling prices, new orders, inventory levels, and employee count. About the Survey D&B Malaysia conducts latest Business Expectations Surveys every quarter. Each quarter, 200 business owners and senior executives representing major industry sectors across Malaysia are asked if they expect increases, decreases or no changes in their upcoming quarterly Sales, Profits, Employment, New Orders, Inventories and Selling Prices. Note: The index figures used in the survey represent the net percentage of survey respondents expecting higher sales, profits, etc., compared with the same quarter of the previous year. The indices are calculated by subtracting the percentage of respondents expecting decreases from the percentage expecting increases.

10 About Dun & Bradstreet Malaysia Dun & Bradstreet Malaysia grows the most valuable relationships in business. By uncovering truth and meaning from data, we connect customers with the prospects, suppliers, clients and partners that matter most, and have since Nearly ninety percent of the Fortune 500, and companies of every size around the world, rely on our data, insights and analytics. For more information about Dun & Bradstreet Malaysia, please visit About Dun & Bradstreet Worldwide Network The Dun & Bradstreet Worldwide Network is an unrivalled alliance of Dun & Bradstreet and leading business information providers across the globe. Through this network, customers grow their most valuable relationships with prospects, customers and partners through data. For nearly two centuries of helping businesses understand this dynamic, we have honed the expertise of how data and analytics forge the relationships that lead to industry-leading performance. To activate these capabilities, we build or co-develop with partners solutions tailored to marketing, sales, finance, supply, compliance or information technology. And we deliver this content however a customer wants to consume it. Contact Information Eugene Zachariah Tan Marcom & Product Development DID: HP: Eugene.tan@dnb.com.sg ###