Business confidence improves in first quarter of 2014: survey

Business optimism saw a significant rise in the first quarter of 2014 mainly on sales volume, net profit and new orders on the hope of better political stability, according to a survey by global research firm Dun & Bradstreet.

The D&B Composite Business Optimism Index for Q1 2014 recorded a significant increase of 16.6 per cent.

"In fact, optimism in three segments, namely volume of sales, net profit and new orders, stands at an 11-quarter high for the period Jan-Mar 2014. Hopes of greater political stability and accompanying certainty on the policy front could be partly responsible for the trigger in business sentiment," Dun & Bradstreet's president and CEO for India, Kaushal Sampat, said in a release issued here.

"Concerns regarding the size of the current account deficit as well as its financing have eased, while hopes of a recovery in the investment cycle have gathered strength with the Cabinet Committee on Investment facilitating a substantial number of clearances for large projects," Mr Sampat said.

Installation of a stable government after the elections combined with policy moves to de-bottleneck large projects will help to counterbalance any possible impact from the Federal Reserve's decision to taper its monetary stimulus, he added.

A significant majority of the respondents expect volume of sales to increase by 83 per cent in Q1 2014, while 5 per cent anticipate the sales volume to decline and the remaining 12 per cent expect volume of sales to remain unchanged.

The report also found that around 78 per cent of the respondents expect an increase in profits during Q1 2014, while 17 per cent indicated they expect no change in net profits and 5 per cent expect their net profits to decline.

Around 44 per cent of the respondents expect the selling price of their products to increase. While a mere 5 per cent anticipate the selling prices to decline, 51 per cent of the respondents expect no change in selling prices.

As much as 81 per cent think their order book position is likely to improve while 13 per cent anticipate no change and 6 per cent expect new orders to decline.

The report said around 57 per cent expect their level of stock to increase during Q1 2014, while 36 per cent expect it to remain unchanged and 7 per cent think their inventory levels may decline.

As much as 62 per cent of the respondents anticipate no change in the size of their workforce employed during Q1 2014, while 35 pc intend to increase the number of employees, while the remaining 3 per cent expect the size of their workforce to decline, the report added.