Indian economy rides on growth momentum in Q2 2024 unrelenting from previous quarters

The Dun & Bradstreet Business Optimism Index records an increase of 4.2% (q-o-q) in Q2 2024

Mumbai, April  24, 2024: The Dun & Bradstreet Composite Business Optimism Index stands at 75.9 for Q2 2024, 4.2% higher compared to Q1 2024. Four out of six optimism indices have shown improvement with optimism for net profits at eight-quarter high. 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 increase in net profits remains strong in Q2 2024, reaching the highest in 8 quarters.
• Optimism for level of selling prices has recorded an improvement of 4 percentage points, reaching the highest value in 4 quarters.
• Optimism for inventory levels has improved by 13 percentage points in Q2 2024, compared to previous quarter.
• Optimism for fresh hiring of employees remains unchanged for three consecutive quarters.
• Despite dipping by 2 percentage points, optimism for order book expansion remains high in Q2 2024, with 60% of respondents expecting an improvement in order books.  
• Food, beverages, and tobacco industries are the least optimistic on five out of six parameters.

Dun & Bradstreet's Composite Business Optimism Index:  Q2 2004 – Q2 2024

Note: BOI Index is for new base (2011)

Arun Singh, Global Chief Economist, Dun & Bradstreet said, “The Indian economy continues its steady performance as economy gains steam gathered in previous quarters. Businesses are anticipating continued policy alignment, supporting the higher optimism with index growing by 4.2% (q-o-q) for Q2 2024. Businesses benefitted from lower input prices, and sustaining consumer confidence. This reflects in higher optimism for selling prices, inventory levels, and net profit. With 8-quarter high optimism for profitability, businesses seem well placed to augment private capital expenditure due to strong cash flow generation. Sales outlook also remain undeterred, additionally supported by the pickup of external demand with record-high merchandise exports in February 2024. Nonetheless, firms continue to hold a cautious stance in terms of stagnant optimism level for fresh hirings from last three quarters as well as marginal dip in new orders. The caution stems from the uncertainties associated with global economic outlook and supply chain pressures. Businesses await fresh macro indicators and moderation in interest rate regime before placing longer term resource commitments.”

Key findings from the Q2 2024 survey

The optimism for increase in volume of sales has improved by 1 percentage point in Q2 2024, compared to previous quarter. Professional and administrative services are the most optimistic, while the capital goods manufacturing sector is the least optimistic on this parameter.

The optimism for increase in net profits has improved by 6 percentage points in Q2 2024, compared to Q1 2024.  Professional and administrative service sector is the most optimistic, while the food, beverages and tobacco manufacturing sector is the least optimistic with respect to increase in net profits on quarterly basis.

The optimism for increase in level of selling prices has improved by 4 percentage points on quarterly basis in Q2 2024. The electricals, electronics and hardware manufacturing sector is the most optimistic on this parameter, while the food, beverages and tobacco manufacturing sector is the least optimistic regarding increase in level of selling prices compared to previous quarter.

The optimism for increase in new orders has declined by 2 percentage points in Q2 2024, compared to Q1 2024. Professional and administrative service sector is the most optimistic, while the food, beverages and tobacco manufacturing sector is the least optimistic regarding order book expansion on quarterly basis.

The optimism for inventory levels has moved up by 13 percentage points in Q2 2024, compared to Q1 2024. The automobile manufacturing sector is the most optimistic on this parameter, while the food, beverages and tobacco manufacturing sector is the least optimistic regarding inventory levels on quarterly basis.

The optimism for increase in hiring of employees has remain unchanged in Q2 2024, compared to previous quarter. Mining sector is the most optimistic, while the food, beverages and tobacco manufacturing sector is the least optimistic regarding the fresh hiring of employees, compared to previous quarter.