KUALA LUMPUR: Malaysian firms are expecting a more favourable outlook in the year ahead, going by the results of the most recent RAM Business Confidence Index.
The survey on business sentiment in Malaysia remained positive for the second and third quarters of 2018, according to a press release issued by RAM on Thursday.
"The Corporate and SME indices improved to a respective 56.8 and 52.5, underpinned by increasingly more broad-based positive sentiment
across all the surveyed aspects," said the ratings agency.
The hiring and turnover aspects of the corporate and SME indices showed the most improvement. The hiring sub-indice rose two points and 1.2 points to 60.6 and 57.7 respectively.
RAM said this improvement indicates that the current employment growth momentum will likely continue over the next six months.
"Analysed in tandem with firms’ sustained bullishness on capital investment and business expansion, this trend suggests that firms will remain in expansionary mode to capitalise on positive business prospects."
The turnover sub-indice grew 2.6 points for corporate and 0.5 points for SME.
RAM noted that the SME turnover sub-indice is at 50.7, marginally above the neutral 50-point mark, but improved from a negative reading two surveys ago.
"Much of the improvement in turnover sentiment for both Corporates and SMEs are attributable to domestic-oriented firms, suggesting
that the economic recovery is increasingly being felt by domestic enterprises," said RAM.
It added that it signals the start of more broad-based economic growth while the boost from the resilient external demand behind Malaysia's growth is filtering down to the local economy.
The index also shows that about 10.8 % and 9% of surveyed domestic-oriented corporates and SMES, respectively, reported higher export contributions to total sales.
This compares to an average of 3.9% and 5% of respondents in the last three surveys.
The retail sector, which has been the least optimistic sector over the last five surveys, showed the most progress in business confidence for the coming two quarters with its overall index rising 1.5 points to 52.2.
"While the sector’s turnover and profitability sub-indices remained below the 50-point threshold, the second consecutive increase to a respective 49.1 and 48.7 is a welcome improvement."
RAM suggests that there could be a recovery in consumer spending, expecially on discretionary items.
Labour market conditions and bullish hiring intentions across the sector could also indicate a healthier retail landscape.
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