 "Indian business tops global optimism list")
With a net balance reading of +35 per cent in October (the net balance is the percentage expecting an increase in the next 12 months minus the percentage expecting a decrease), India is above both the average for the BRIC (Brazil, Russia, India, China) countries’ average (+27 per cent) and the worldwide trend (+28 per cent), which is at a five–year low, shows the survey, data for which was collected during October 13–29.
The net balance reading in India for the profit outlook in the next 12 months is +34 per cent, above BRIC (+19 per cent) and the global reading of +20 per cent.
The Markit Global Business Outlook Survey looks at expectations for the year ahead across 6,100 companies. Markit Economics is a specialist compiler of business surveys and economic indices, including the Purchasing Managers’ Index (PMI) series.
The surveys also highlight a growing list of concerns among companies about the outlook for the year ahead that include fear of a worsening global economic climate and, notably, renewed downturn in the euro zone, the prospect of higher interest rates in Britain and America next year, geopolitical risk emanating from crises in Ukraine and West Asia; and growing political uncertainty in many countries, notably the US, UK and Japan.
Regions
Of all major countries surveyed, British companies remained the most upbeat about the year ahead, despite expectation about activity levels dropping to the lowest since June of last year in both manufacturing and services sectors.
Business expectations across the main emerging markets fell on average to the lowest seen in the survey’s five-year history, though trends varied by country, the findings suggest.
“A key factor that has held back economic growth in recent years has been the disappointing performance of major emerging market (EM) economies, and this looks set to continue, and perhaps even intensify, over the coming year. Across the four ‘BRIC’ emerging markets, business optimism has sunk to the lowest seen since the financial crisis. Russia is the biggest concern, with sanctions, a spiralling currency and uncertainty driving business expectations down sharply to a new low. A slight upturn in business expectations in China provides some hope that companies there are at least not expecting a hard landing,” said Chris Williamson, chief economist, Markit.
Adding: “Optimism in Japan continued to lag that of the US, UK and even the euro zone, dropping to a two-year low to suggest companies have become increasingly disillusioned with the potential for ‘Abenomics’ to boost growth, although there are signs that Japan’s recent deflation-beating policies will continue to drive prices higher next year.”
At the global level, optimism in manufacturing fell to its lowest since mid-2013 but remained ahead of that seen in services, where confidence about the outlook slumped to the lowest in the survey’s five-year history.
The Business Outlook Survey for Global Manufacturing and Services, produced by Markit, is based on a survey of around 11,000 manufacturers and service providers.
Optimism among Indian manufacturers regarding the prospects for output growth was higher than the BRIC region net balance average of around 25 per cent but lower as compared to the global net balance of 32 per cent.
As compared to the previous survey findings in June, the optimism in India remained unchanged. Companies anticipate output growth as a result of expansion in demand, lower government taxation and greater market stability.
“Manufacturing firms in India remain confident that business revenues will continue to grow over the next 12 months. Similarly, expectations of profitability are the strongest in a year and the most optimistic among the BRIC countries,” the findings suggest.
Indian service providers remain confident that activity will rise over the next 12 months from October. Despite falling marginally from +37.7 per cent in June to +36.5 per cent, the net balance is stronger than the global average of 27 per cent.
While Indian service providers anticipate a sharp rise in staff, non-staff and service costs translating into higher input costs, companies also expect to outsource more work, the findings suggest. Business revenues and profitability in the Indian services sector are both projected to rise. At +35.6 per cent, the net balance for profits is the highest in two years and the third-strongest globally.