Business sentiment remains muted for Q1 2021 albeit slight improvements from the previous quarter

Malaysian business sentiment continues to remain muted for Q1 2021 although slight improvements were seen for the third consecutive quarter since Q2 2020. According to Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study, BOI inched up by +3.44 percentage points from -12.83 percentage points in Q4 2020 to -9.39 percentage points in Q1 2021. On a year-on-year (y-o-y) basis, BOI plunged by -19.61 percentage points, down from +10.22 percentage points in Q1 2020 to -9.39 percentage points in Q1 2021.

The six business indicators under the quarterly BOI study include volume of sales, net profits, selling price, inventory level, employees and new orders. This is the 32 nd D&B BOI study being released in Malaysia.

5 of six indicators have climbed upwards on a quarter-on-quarter (q-o-q) basis for Q1 2021.

❖ Volume of sales rose from -16.67 percentage points in Q4 2020 to -11.91 percentage points in Q1 2021.

❖ Net profit increased remained contractionary at -20.63 percentage points in Q1 2021.

❖ Selling price climbed from -11.90 percentage points in Q4 2020 to -3.97 percentage points in Q1 2021.

❖ New orders rose from -0.79 percentage points in Q4 2020 to 0 percentage point in Q1 2021.

❖ Inventory levels increased from -15.87 percentage points in Q4 2020 to -10.32 percentage points in Q1 2021.

❖ Employment levels inched up from -10.32 percentage points in Q4 2020 to -9.52 percentage points in Q1 2021. On a year-on-year (y-o-y) basis, 5 of six indicators have fallen for Q1 2021.

❖ Volume of sales plunged visibly from +8.70 percentage points in Q1 2020 to -11.91 percentage points in Q1 2021.

❖ Net profits dived from +11.11 percentage points in Q1 2020 to -20.63 percentage points in Q1 2021.

❖ Selling price fell from +24.16 percentage points in Q1 2020 to 0 percentage point in Q1 2021.

❖ New orders dropped from +24.16 percentage points in Q1 2020 to 0 percentage point in Q1 2021.

❖ Inventory levels tumbled from -1.93 percentage points in Q1 2020 to -10.32 percentage points in Q1 2021.

❖ Employment levels plunged from +9.17 percentage points in Q1 2020 to -9.52 percentage points in Q1 2021.

Sectoral Outlook for 2021

Both wholesale and manufacturing sectors are most upbeat while the outlook for the remaining sectors remain muted. The wholesale industry has emerged as one of the most upbeat sectors with 4 of six indicators in the positive zone. Volume of sales rebounded into positive territory, up from -22.67 percentage points in Q4 2020 to +6.67 percentage points in Q1 2021. Net profit remained contractionary at -33.33 percentage points in Q1 2021. New orders rose from 0 percentage point in Q4 2020 to +6.67 percentage points in Q1 2021.

D&B Malaysia conducts latest Business Expectations Surveys every quarter. Each quarter, 200 business owners and senior executives representing major industry sectors across Malaysia are asked if they expect increases, decreases or no changes in their upcoming quarterly Sales, Profits, Employment, New Orders, Inventories and Selling Prices. The index figures used in the survey represent the net percentage of survey respondents expecting higher sales, profits, etc., compared with the same quarter of the previous year.

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