Business Optimism Index Dips in Q1 2025

Mumbai, February 14, 2025: Dun & Bradstreet, a global leader in business decisioning data and analytics, released the Business Optimism Index for Q1 2025, which stands at 114.4, marking a 15.1% decline compared to Q4 2024. The decline reflects a cooling of business sentiment following the festive-driven peak in the previous quarter. Several key parameters have shown a decline in optimism, signalling a cautious sentiment among businesses as they adjust to post-festive season conditions and global economic uncertainties. The Dun & Bradstreet Business Optimism Index, which has been tracking the changing business sentiment of India Inc. since 2002, continues to serve as a leading indicator of India’s economic growth, maintaining a strong correlation of approximately 80% with the Gross Domestic Product (GDP).

Highlights

• Optimism for sales volume moderated by 23 percentage points compared to the previous quarter.
• Optimism for export orders declined sharply by 41 percentage points, particularly in sectors like construction and hospitality, indicating challenges in global demand.
• Optimism for selling prices remains strong, especially in the hospitality sector with 83 percent of respondents showing optimism.
• Optimism for inventory levels decreased sharply by 21 percentage points compared to the previous quarter.
• Optimism for both domestic and global macroeconomic environments has seen an increase of 2 percentage points.
• Electrical, electronics and hospitality sectors remain most optimistic across multiple parameters.

Dun & Bradstreet Business Optimism Index

Arun Singh, Global Chief Economist, Dun & Bradstreet said, “The Dun & Bradstreet Business Optimism Index for Q1 2025 has moderated to 114.4, down 15.1% from Q4 2024, reflecting a shift in business sentiment post-festive season. The decline is attributed to reduced consumption, lower investments, weak manufacturing, high inflation, and a widening trade deficit, compounded by a depreciating rupee. Key indicators have softened, particularly for export orders, driven by concerns over protectionist policies and supply chain disruptions. Additionally, businesses have become more cautious about input costs and inventory levels after last quarter’s stockpile. Despite these challenges, businesses appear to be optimistic about the outlook of domestic and global macroeconomic conditions, buoyed by expectations for continued government significant infrastructure, consumption, and renewable energy investments.”

Key findings from the Q1 2025 survey

• The optimism for sales volume declined by 23 percentage in Q1 2025 compared to previous quarter Q4 2024. The metal, food, beverages, and tobacco sectors are the most optimistic, while the real estate sector is the least optimistic.
• The optimism for domestic orders declined by 21 percentage points in Q1 2025 compared to previous quarter Q4 2024. The professional and administrative service providers are most optimistic, while the capital goods and chemical sectors are least optimistic.
• The optimism for export orders declined significantly by 41 percentage points in Q1 2025, reaching its lowest level since Q1 2023. While the chemical sector is the most optimistic, the hospitality sector shows the least confidence.
• The optimism for net profit declined by 18 percentage in Q1 2025 compared to previous quarter Q4 2024. Hospitality is the most optimistic sector, while the metals sector is the least optimistic.
• The optimism for input costs declined by 14 percentage points in Q1 2025 compared to previous quarter Q4 2024. Higher optimism is observed in the food, beverages and hospitality sectors, while the information and communication service sectors report lower optimism.
• The optimism for employment declined by 3 percentage points in Q1 2025 compared to previous quarter Q4 2024. The hospitality sector is the most optimistic, while the metal sector is the least optimistic.

The report can be downloaded for free from the Dun & Bradstreet India website (http://www.dnb.co.in/)