Global Business Confidence At Five-Year Low
Global business confidence slipped to five-year low in October, according to a survey of 6,100 companies.The number of firms that expect business activity to be higher in the year ahead exceeded those that expected a decline by about 28%.
But, that net balance was lower than 39% in June and the lowest since the Markit Global Business Outlook Survey began in 2009.
Hiring and investment plans also dipped to post financial crisis lows.
“Clouds are gathering over the global economic outlook, presenting the darkest picture seen since the global financial crisis,” said Chris Williamson, chief economist at Markit in a statement.
Long list of worries
The decline in optimism among businesses was due to a growing list of worries, according to the report.
Fears of a renewed downturn in the eurozone, the prospect of higher interest rates in the UK and US next year, along with geo-political risks from crises in Ukraine and the Middle East have all dented business confidence across the globe.
“A key factor that has held back economic growth in recent years has been the disappointing performance of major emerging market economies, and this looks set to continue, and perhaps even intensify, over the coming year,” Mr Williamson added, citing that business optimism among the BRIC countries had sunk to its lowest since the financial crisis.
Russia was the biggest concern among the leading countries as “sanctions, a spiralling currency and uncertainty drove business expectations down sharply to a new low”.
On the bright side, UK companies were the most upbeat about the year ahead out of all the major countries surveyed in October.
That comes despite future business activity levels at its lowest since June 2013 for both the manufacturing and services sectors.
UK firms were also the most optimistic about hiring plans among major economies.
“[The optimism] suggests the UK will continue to outperform its peers in 2015, albeit with growth slowing from that seen in 2014,” Mr Williamson said.
On the downside was a surprise downturn in the US, where optimism hit a new survey low as the service sector saw a “dramatic” decline.
“US growth therefore looks likely to have peaked over the summer months, with a slowing trend signalled for coming months,” he said.