Local business sentiment remains muted in 1Q21

by TMR / Pic by TMR FILE PIX

MALAYSIAN business sentiment continued to remain muted for the first quarter of 2021 (1Q21) although slight improvements were seen for the third consecutive quarter since 2Q20.

According to Dun & Bradstreet Malaysia’s Business Optimism Index (BOI) study, BOI inched up by 3.44 percentage points from -12.83 percentage points in 4Q20 to -9.39 percentage points in 1Q21.

However, on a year-on-year (YoY) basis, BOI plunged -19.61 percentage points, down from 10.22 percentage points in 1Q20 to -9.39 percentage points in 1Q21.

“We are seeing gradual signs of improvement in business sentiment among firms here. Although the overall outlook is expected to remain downbeat for 1Q21, the recovery in both external-oriented and domestic economy will spur higher consumer spending and trade activities as we move into the second half of 2021,” said Audrey Chia, CEO of Dun & Bradstreet (M) Sdn Bhd.

“The potential Covid-19 vaccine rollout, increased government spending and Budget 2021 measures will also likely contribute to improved optimism among businesses,” she added.

The firm’s study revealed that for 1Q21, both the wholesale and manufacturing sectors were most upbeat, while the outlook for the remaining sectors remained muted.

The wholesale industry has emerged as one of the most upbeat sectors with four of six indicators in the positive zone.

The volume of sales rebounded into positive territory, up from -22.67 percentage points in 4Q20 to 6.67 percentage points in 1Q21.

Although the sector’s net profit remained contractionary at -33.33 percentage points in 1Q 21, its selling price increased from -6.67 percentage points in 4Q20 to 26.67 percentage points.

New orders rose from zero percentage point in 4Q20 to 6.67 percentage points in 1Q21. Inventory levels jumped from -15.87 percentage points in 4Q20 to -10.32 percentage points in 1Q21. Additionally, employment inched up from -10.32 percentage points in 4Q20 to -9.52 percentage points in 1Q21.

For manufacturing, it said the selling price increased from -10 percentage points in 4Q20 to -5 percentage points for the next quarter. New orders also climbed to 10 percentage points in 1Q21.

According to the firm, inventory levels rebounded from -15 percentage points in 4Q20 to 20 percentage points in 1Q21.

The outlook for the transportation sector remained muted with only one indicator in positive territory, while the construction sector was also relatively downbeat with only one indicator in the expansionary zone.

The services sector revealed some signs of improvement with four indicators improving from the last quarter such as volume of sales and slight uptick in net profit and selling price. — TMR