Businesses are cautiously optimistic about their performance in Q4 2022

Dun & Bradstreet’s Business Optimism index declined by 12.2% (y-o-y) in Q4 2022

Mumbai, November 28^th, 2022: The Dun & Bradstreet Composite Business Optimism Index stands at 83.1 for Q4 2022, a fall of 12.2% compared to Q4 2021. Five out of six optimism indices have registered a decline compared to Q4 2021. 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 selling prices stands at 41% in Q4 2022 compared to 47% in Q4 2021
• Optimism for net profits stands at 55% in Q4 2022 compared to 62% in Q4 2021
• Optimism for volume of sales stands at 70% in Q4 2022 compared to 79% in Q4 2021
• Optimism for new orders stands at 65% in Q4 2022 compared to 69% in Q4 2021
• Optimism for size of the workforce stands at 48%, the lowest in five quarters
• The intermediate goods sector is the least optimistic on net profits and employees

Dun & Bradstreet's Composite Business Optimism Index:  Q4 2002 – Q4 2022

Note: BOI Index is for new base (2011)

Arun Singh, Global Chief Economist, Dun & Bradstreet said: “While optimism amongst companies has declined compared to the same period last year, the festive season has helped the optimism level to improve from Q3 2022. The optimism level for new orders, net sales, selling price and profit levels has witnessed a considerable increase as consumers are expected to spend heavily after two years of restricted festival celebrations. Surprisingly, optimism for hiring employees is at a five-quarter low, even though all the other parameters are up, which might indicate that employers are cautious around increasing the size of their workforce, given earnings could be negatively impacted by the expected slowdown. Going forward, optimism levels are expected to wane after the festive season is over as geopolitical tensions remain high, financial markets remain volatile and global challenges create significant headwinds for businesses.”

Key findings from the Q4 2022 survey

70% of the respondents expect the volume of sales to increase in Q4 2022 compared to 79% in Q4 2021, a decrease of 9 percentage points. While 21% expect it to remain unchanged, 9% expect the volume of sales to decline.

55% of the respondents expect an increase in net profits in Q4 2022 compared to 62% in Q4 2021, a decrease of 7 percentage points. 34% expect net profits to remain unchanged, while 11% expect it to decrease.

51% of the respondents expect no change in the selling price of their products in Q4 2022. 41% of the respondents expect the selling price of their products to increase during Q4 2022, while 8% expect a decline.

65% of the respondents expect their order book position to improve in Q4 2022, compared to 79% in Q4 2021, a decrease of 14 percentage points. While 28% of the respondents expect new orders to remain unchanged, only 7% anticipate new orders to increase.

50% of the respondents expect their inventory level to increase during Q4 2022, compared to 38% in Q4 2021, an increase of 12 percentage points. While 35% anticipate no change in inventory level, 15% expect inventory level to decline.

48% of the respondents expect an increase in the size of their workforce employed during Q4 2022, which is 1 percentage point lower than Q4 2021. While 45% anticipate no change in the number of employees, 7% expect their workforce size to decline.