Business sentiment plummets in 2Q20

By HARIZAH KAMEL / Pic By MUHD AMIN NAHARUL

BUSINESS sentiment among Malaysian companies plunged to a new low in the second quarter of 2020 (2Q20) as firms dive largely into the recent surge in Covid-19 cases, said Dun & Bradstreet (D&B) Malaysia Sdn Bhd CEO Audrey Chia.

“We expect the dampened outlook to persist into the 2Q20 and 3Q20, 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 yesterday.

Sentiment percentage fell into the contractionary of -21.52 percentage points from +10.22 percentage points in the previous quarter.

On a year-on-year (YoY) basis, business optimism fell from +5.61 percentage points in 2Q19 to -21.52 percentage points in 2Q20, according to D&B’s Business Optimism Index (BOI) study.

All six business indicators namely volume of sales, net profits, selling price, inventory level, employees and new orders under the BOI study have declined in the quarterly and yearly basis.

For the quarter-on-quarter basis, net profit dropped from +11.11 percentage points in 1Q20 to -40.20 percentage points in 2Q20, volume of sales fell from +8.7 percentage points to -27.84 percentage points and selling price fell from +10.14 percentage points to -10.31 percentage points.

It also showed new orders fell from +24.16 percentage points to -26.80 percentage points, employment levels decreased from +9.17 percentage points to -5.21 percentage points, and inventory levels fell from -1.93 percentage points to -20.62 percentage points.

On a YoY basis, volume of sales fell from +6.83 percentage points in 2Q19 to -27.84 percentage points in 2Q20, net profit dropped from +1.95 percentage points to -40.20 percentage points and selling price fell from +6.83 percentage points to -10.31 percentage points.

Meanwhile, new orders plunged from +10.24 percentage points to -26.80 percentage points, inventory levels fell from +4.39 percentage points to -20.62 percentage points and employment levels dropped from +3.41 percentage points to -5.21 percentage points.

Looking forward, the study said the majority of the sectors are pessimistic about the outlook, while the services and transportation sectors are the least optimistic as all six indicators for both sectors are in the contractionary zone for 2Q20.

Additionally, the outlook for the manufacturing sector is expected to dampen significantly with five indicators in the negative region; the same sentiments seen within the wholesale trade sector.