Global economic uncertainty and soaring inflation,coupled with persistent high interest rates,are likely to hurt the business confidence in the current quarter,US-based research firm Dun and Bradstreet said. "The steep drop in confidence has added to the evidence that businesses are wary about the potential impact of global economic uncertainty on business outcomes. The persistently high interest rates,which have nearly peaked,and continued policy drift,have dented business confidence. "The decline resulted from a broad-based deterioration in sentiment across the sectors,with losses in confidence being particularly marked with regard to volume of sales,net profits and new orders which are at their nine quarter low," Dun & Bradstreet (India) President and CEO Kaushal Sampat said. He further said that timely and effective policy action will be critical to restore business confidence and stimulate economic activity over the next quarter. The Business Optimism Index (BOI),which measures the pulse of the business community,stood at 143.7 points for the fourth quarter of calender year 2011,a fall of 12.1 per cent vis-a-vis the year-ago period- steepest decline in two-and-a-half years. However,in comparison to the second quarter of 2011,the BOI recorded a negligible increase of 0.1 per cent. For calculating the composite BOI,each of the six parameters - net sales,net profits,selling prices,new orders,inventories and employee levels - is assigned a weight. The parameter weights are then applied to these ratios and the results aggregated to arrive at the Composite Business Optimism Index. It was observed that all the six optimism indices have decreased compared to the previous quarter,the report said. The report said the employment scenario in the country would not see major changes as more than half of the respondents (54 per cent) expecting no change in the size of their workforce during the fourth quarter of 2011. In comparison,43 per cent of respondents expecting the size of their workforce to increase and another 3 per cent anticipate a decline.
