PETALING JAYA: Business sentiment among Malaysian companies for the second quarter of 2020 is at its lowest level in three years as the majority of the sectors, particularly services and transportation, turn pessimistic on the outlook.
The two sectors are expecting the largest hit on their profitability and sales volume.
This is according to Dun & Bradstreet (D&B) Malaysia’s business optimism index (BOI) study, which saw the BOI plunged into the contractionary zone from 10.22 percentage points in the first quarter of 2020 to -21.52 percentage points in second-quarter 2020.
On a year-on-year basis, the BOI in second-quarter 2019 was 5.61 percentage points.
The BOI figures for second-quarter 2020 was mainly due to lower expectations of profitability and sales volume.
The six business indicators under the quarterly BOI study include volume of sales, net profits, selling price, inventory level, employees and new orders.
Dun & Bradstreet CEO Audrey Chia noted that sentiment among Malaysian firms plunged largely due to the recent surge in Covid-19 cases.
“We expect the dampened outlook to persist into the second and third quarter of 2020, given that a potential near-term recovery of the hardest hit sectors such as services and transportation is quite unlikely.
“However, we might be able to see some green shoots once the active cases begin to peak globally.
“In view of these adverse developments, we have trimmed our 2020 growth forecast to 4%, ” she said in a statement.
The services and transportation sectors recorded contraction in figures for all six indicators, followed by manufacturing and wholesale trade, which recorded five indicators in the negative region.
The services sector saw its volume of sales indicator dive from 16.48 percentage points in first-quarter 2020 to -34.14 percentage points in second-quarter 2020, while net profit fell visibly from 13.19 percentage points in first-quarter 2020 to -34.15 percentage points in second-quarter 2020.
On the other hand, the transportation sector registered a plunge in its volume of sales and net profits indicators, from 50 percentage points in first-quarter 2020 to -83.33 percentage points in second-quarter 2020.
Meanwhile, in the overview of business indicators, the transportation and financial sectors were the most pessimistic towards net profit and volume of sales.
As for selling prices, only the agricultural sector was most upbeat.
The BOI is a quarterly measure of business confidence in the economy.
It is conducted based on a business sentiment survey, where 200 business owners and senior executives representing major industry sectors across Malaysia are asked if they expect increases, decreases or no changes in their upcoming quarterly sales, profits, employment, new orders, inventories and selling prices.
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