DoSM: Malaysia’s business confidence dropped -21.3 pc in Q3; all industries pessimistic with retail gloomiest

According to the Department of Statistics Malaysia (DOSM), businesses from all sectors in Malaysia are more pessimistic about their business conditions in the third quarter of 2021 or the months of July to September. ― Picture by Yusof Mat Isa
According to the Department of Statistics Malaysia (DOSM), businesses from all sectors in Malaysia are more pessimistic about their business conditions in the third quarter of 2021 or the months of July to September. ― Picture by Yusof Mat Isa

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KUALA LUMPUR, Aug 26 ― Businesses from all sectors in Malaysia are more pessimistic about their business conditions in the third quarter of 2021 or the months of July to September, the Department of Statistics Malaysia (DoSM) said today.

In its latest Business Tendency Survey, DoSM noted that businesses’ confidence indicator had fallen to -21.3 per cent in Q3 2021, which showed weakened confidence when compared to -3.1 per cent in Q2 2021.

Previously, the quarterly confidence indicator was -25.1 per cent (Q2 2020), -21.0 per cent (Q3 2020), before improving to -10.8 per cent (Q4 2020), and dipping slightly to -11.3 per cent (Q1 2021) and then improving to -3.1 per cent in Q2 2021.

In explaining the decline in business confidence for the months of July to September this year, DoSM noted that all the four sectors (Industry, Services, Construction, and Wholesale and Retail Trade) “anticipate unfavourable business conditions for the third quarter 2021 in light of severe and prolonged Covid-19 pandemic in this country.”

The wholesale and retail trade sector was the only sector that was positive in the second quarter of 2021 with a confidence indicator of 5.6 per cent, but this has completely changed as it plunged into negative trajectory with -39.4 per cent for the third quarter.

This is due to both subsectors, wholesale trade and retail trade, being “less confident towards their business situation in the next three months”, DoSM said.

The construction sector which was already the most pessimistic in the second quarter this year at -30.5 per cent, again was the most pessimistic as it anticipated its business situation to recede to -45.0 per cent for the third quarter this year.

The industry sector’s confidence indicator too fell from -1.5 per cent (Q2 2021) to -11 per cent (Q3 2021), while the Services sector fell from -6.1 per cent to -22.8 per cent during the same period.

Business sentiment was more upbeat as a whole in the second quarter, as reflected in businesses’ forecast of their quarterly gross revenue and number of employees.

In the second quarter survey, the percentage of businesses expecting higher gross revenue for the second quarter at 35.2 per cent was more than the percentage of businesses expecting lower gross revenue at 23.1 per cent with the net balance or difference between these two percentages showing a positive figure at 12.1 per cent.

However, pessimism prevailed with the net balance now -12.9 per cent, with the situation now reversed as 36.5 per cent of businesses expected lower gross revenue for the third quarter while a lower figure of 23.6 per cent expected lower gross revenue.

The majority of businesses (76.5 per cent) in the survey anticipated that they would retain their workforce for the third quarter.

There was more pessimism as shown in the net balance of -6.5 per cent; those intending to reduce their headcount was higher at 15.0 per cent compared to 8.5 per cent that expected to hire more in the third quarter.

This is in comparison to the second quarter’s survey, with a net balance of 0.6 per cent where there were more respondents predicting an increase in headcount at 14.3 per cent for the second quarter, as compared to the percentage of businesses looking to cut down their workforce at 13.7 per cent.

As for expectations on their business performance for July to December 2021, all sectors were pessimistic on their business outlook for the next six months.

Out of the four sectors, the wholesale and retail trade sector showed the most pessimism.

As a whole, the percentage of Malaysia’s businesses that showed pessimism was more than those who showed optimism for the next six months’ business outlook for July to December 2021, with the difference in their percentage or their net balance showing as -21.7 per cent.

This is compared to the previous survey in the second quarter, where there were more businesses that were optimistic compared to those that were pessimistic for the next six months’ business performance, with a previous net balance of +11.0 per cent for April to September 2021.

In the previous survey, optimism had prevailed in all four sectors in terms of their six months outlook, with the industry sector and the wholesale and retail trade sector showing the most positivity with a net balance of 12.5 per cent then for April to September.

But for July to December, the net balance for business outlook for the wholesale and retail trade sector fell from 12.5 per cent then to -59.7 per cent, indicating that this sector foresees a challenging business performance in the upcoming six months.

This was followed by the construction sector where the net balance fell from 6.1 per cent for April to September, to -24.2 per cent for July to December, while the services sector similarly recorded a decline from 8.4 per cent to -14.2 per cent.

The industry sector was the least pessimistic as it expects business conditions to slip from 12.5 per cent, to -11.8 per cent for July to December this year.

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