Business confidence among Malaysian firms improves for the third consecutive quarter

Filepic of foreign workers at a construction site.

KUALA LUMPUR: Business sentiment among Malaysian companies improved further for the third consecutive quarter in the fourth quarter (Q4 17), reaching its new peak in six consecutive quarters. 

According to Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study, overall BOI climbed from +3.40 percentage points in Q3 17 to +5.52 percentage points in Q4 17. On a year-on-year (y-o-y) basis, BOI rose from +3.83 percentage points in Q4 16 to +5.52 percentage points in Q4 2017.

Dun & Bradstreet Malaysia CEO Audrey Chia said it expect the outlook for Malaysian businesses to end off on a relatively good note for 2017. 

This is largely attributed to positive growth within the construction sector as well as an increase in electronics, food and beverage manufacturing activities over the recent months, she added. 

“On the domestic front, the government has a development plan in place which focuses on boosting the country’s labour productivity, skills upgrading of employees and infrastructure, which bodes well for businesses here and making Malaysia competitive in high value-added sectors.

“As an open economy, however, Malaysia is highly vulnerable to any increase in protectionism, which is a non-negligible possibility in the current anti-globalisation environment. 

“With the acceleration in inflation rates, a slowdown in consumer spending and dampening of household sentiments will also be expected. Hence, we remain cautiously optimistic in our outlook for the rest of the year,“ Chia said.

Dun & Bradstreet is one of the world leading business information providers and this is the 19th D&B BOI study being released in Malaysia. 

The six business indicators under the quarterly BOI study include volume of sales, net profits, selling price, inventory level, employees and new orders. 

Five of six indicators have climbed upwards on a quarter-on-quarter (q-o-q) basis. Volume of sales rose from +3.88 percentage points in Q3 17 to +5.03 percentage points in Q4 17.

Net profits rebounded from the contractionary zone, from -3.88 percentage points in Q3 17 to +5.53 percentage points in Q4 17. Selling price climbed from +2.91 percentage points in Q3 17 to +4.52 percentage points in Q4 17.

New orders eased from +8.74 percentage points in Q3 17 to +7.54 percentage points in Q4 17. Inventory levels jumped from +4.85 percentage points in Q3 17 to +6.53 percentage points in Q4 2017.

Employment levels inched upwards from +3.88 percentage points in Q3 17 to +4.0 percentage points in Q4 2017. On a year-on-year (y-o-y) basis, four  of six business indicators have improved for Q4 2017.

Both volume of sales and net profits have moderated downwards from +7.0 percentage points in Q4 16 to +5.03 percentage points in Q4 17 and from +7.0 percentage points in Q4 16 to +5.33 percentage points in Q4 17.

Selling price increased moderately from +0.5 percentage points in Q3 16 to +2.91 percentage points in Q3 17. New orders jumped from +5.50 percentage points in Q4 16 to +7.54 percentage points in Q4 17.

Inventory levels climbed visibly from +0.50 percentage points in Q4 16 to +6.53 percentage points in Q4 2017. Employment levels rose from +2.50 percentage points in Q4 16 to +4.0 percentage points in Q4 17.

Three sectors have emerged as the most optimistic with all six indicators each in positive territory. According to D&B Malaysia, the construction, manufacturing and services sectors were most upbeat for Q4 17.

Construction
Following a pessimistic third quarter, the construction sector has emerged as one of the most optimistic sectors with six indicators in expansionary zone for Q4 17.

Volume of sales has risen from +11.11 percentage points in Q3 17 to +28.57 percentage points in Q4 17. Both net profits and selling price climbed from 0 percentage point in Q3 17 to 14.29 percentage points in Q4 17.

Both new orders and inventory have also jumped visibly from 0 percentage point in Q3 17 to +28.57 percentage points in Q4 17; and from 0 percentage point in +42.86 percentage points in Q4 17. Employment levels rebounded from -11.11 percentage points in Q3 17 to +14.29 percentage points
in Q4 17.

Manufacturing
The outlook for the manufacturing sector has also displayed improvements with all six indicators in positive territory, as compared to three of six indicators in Q3 17.

Volume of sales, net profits and selling price rebounded from the contractionary zone from -7.69 percentage points in Q3 2017 to +7.27 percentage points in Q4 17; from -19.23 percentage points in Q3 17 to +3.64 percentage points in Q4 17; and from -3.85 percentage points in Q3 17 to +5.45
percentage points in Q4 17.

New orders eased from +7.69 percentage points in Q3 17 to +5.45 percentage points in Q4 17 while inventory levels moderated from +5.77 percentage points in Q3 17 to +1.82 percentage points in Q4 17.

Employment levels have also dropped from +7.69 percentage points in Q3 17 to +1.82 percentage points in Q4 17.

Services
Following a moderation in outlook, the services sector is expected to be relatively more upbeat compared to the previous quarter with 6 indicators in expansionary zone.

Net profits rebounded from negative territory from -1.28 percentage points in Q3 17 to +2.30 percentage points in Q4 17. Employment levels climbed from +5.13 percentage points in Q3 17 to +6.82 percentage points in Q4 17.

Selling price increased from +1.28 percentage points in Q3 17 to +2.30 percentage points in Q4 17. Both inventory levels and new orders have eased from +3.85 percentage points in Q3 17 to +1.15 percentage points in Q4 17; and from +7.69 percentage points in Q3 17 to +2.30 percentage points in Q4 17.

Volume of sales has also moderated downwards from +5.13 percentage points in Q3 17 to +1.13 percentage points in Q4 17.