‘Business confidence subdued in June’

‘Business confidence subdued in June’

The Indian business sentiment regarding future activity remained subdued in June amid intense competition, high fuel prices and strong cost pressures, says a survey.

As per the IHS Markit Business Outlook survey, just 20% of the Indian businesses expect growth in output over the next 12 months, unchanged from February.

The business confidence reading for India was below the average recorded for BRIC (Brazil, Russia, India and China) nations at 23% and globally at 31%.

High fuel prices

The threats to the 12-month outlook are centered on the uncertainty surrounding policy decisions, intense competition, high fuel prices and strong cost pressures, the survey noted.

“Latest survey data highlights that business confidence regarding future activity in India remains unchanged from February and is slightly weaker than the average for BRIC nations,” said Aashna Dodhia, economist at IHS Markit.

Ms. Dodhia further noted, “sentiment surrounding new business and revenue expectations is at the highest level seen since October 2016, as survey respondents forecast further improvements in client demand and market conditions.”

At the sector level, while Indian manufacturing companies signalled a stronger degree of positive sentiment, service providers were less upbeat.

Hiring Meanwhile, hiring intentions remained positive in June, particularly in the manufacturing sector. Besides raising staff numbers, Indian companies intend to increase their investment spending to expand capacity.

Also, although Indian companies expressed concerns that high oil prices may fuel inflationary pressures, the survey signals that this has not deterred company plans to expand capacity in the year ahead, as hiring intentions and capex plans were both revised up in June,Ms. Dodhia said.