Growth prospects still intact: New global sentiment index measures optimism of companies

The Global Business Optimism Insights (GBOI) reports serve as a sentiment index for five subsectors: Global Business Optimism Index, Global Business Supply Chain Continuity Index, Global Business Financial Confidence Index, Global Business Investment Confidence Index, and Global Business ESG Index. It is based on a survey of around 10,000 leaders from a broad universe of business sectors and company sizes. The GBOI thus provide a detailed insight into the expectations of business leaders around the world regarding the current business, macroeconomic and investment environment.

Commenting on the findings, Arun Singh, Global Chief Economist at Dun & Bradstreet, says: "The declines in the Global Business Optimism, Supply Chain Continuity and Financial Confidence indices reflect underlying stress in the global economy." And he adds "While the unprecedented tightening of monetary policy has helped contain inflation in some countries, it has also raised the specter of an economic slowdown and stress on corporate balance sheets. However, the global economy has not fared as poorly as feared, with most companies expecting to increase their capital spending by 2-6 % in technology, real estate, product development and sustainability initiatives, which bodes well for improving economic conditions."

Sentiment index with downward trend

The report shows less optimism than in the previous quarter. However, executives still expect the situation to improve. The drop in optimism in the Supply Chain Continuity Index sub-index is particularly marked, at 50.6 from 53.7 in the previous quarter. Values above 50 reflect an improvement, while values below 50 reflect a deterioration compared with the prior-year period. There are pronounced declines particularly in the U.S. (-10.2 %) and Germany (-8.9 %). The biggest risks: Economic uncertainty, regulatory challenges, and rising prices for basic materials.

Declines were also recorded in the Financial Confidence Index, which tracks assessments of financing conditions, credit risks and balance sheet strength. Unlike for the USA (-4.2 %), the figures here show a marginal improvement (0.2 %) for Germany. Japan (58.7), South Korea (58.3) and Turkey (58.2) are the most confident about their financial condition, according to the Financial Confidence Index.

The downward trend in these subindices leads to a slight deterioration in the overall index, which slips from 53.3 to 52.5. Here, a minus of 2 % in the industrialized countries is offset by a plus of 0.4 % in the emerging markets. Companies in emerging markets such as Brazil (0.9 %) and India (0.4 %) report the largest jumps in optimism for Q3 2023; eurozone markets report the largest declines (-3.9 %). At 3.0 %, the decline in Germany is somewhat smaller than in Italy and France, for example (-4.6 % and -4.2 %, respectively).

At least optimistic companies:

• Financial services (49.9)
• Automotive (51.2)
• Mining (51.5)
• Metals (52.1

The most optimistic companies:

• Utilities (53.4)
• Trade (54.1)
• Hospitality (54.2)

Source: www.dnb.com