The 112th CII Business Outlook Survey shows that business sentiment has bounced back. The latest CII Business Confidence Index has surged to the level of 50.3 in Jul-Sep 2020, bouncing back from its lowest reading of 41.0 recorded in Apr-Jun 2020. The stellar recovery in the index has been supported by the remarkable increase in the Expectations Index (EI), which rose 46% quarter-on-quarter, to the level of 55.2, as nation-wide lockdown restrictions were lifted, and businesses gradually began to reopen during the Jul-Sep quarter. The Current Situation Index (CSI), however, continued to trail below 50, at 40.6, depicting weak confidence during the Apr-Jun 2020- a period marked with stringent lockdown measures and complete shutdown of business operations.
The survey was conducted during August-September 2020 and saw the participation of more than 150 firms across all industry sectors, including micro, small, medium and large enterprises, from different regions. The results for the Jul-Sep quarter signal green shoots of recovery as nearly half of the respondents anticipate an increase in new orders (49 percent) and sales (46 percent) during the said quarter, even though a majority of them witnessed decline in sales and new orders in the preceding quarter. As a result, capacity utilization levels are also expected to improve. A major share of the respondents (41 percent) foresee higher utilization levels of 50-75% in the Jul-Sep quarter, closely followed by 37 percent of the respondents anticipating capacity utilization at 75-100% in the said quarter.
Profitability, however, may be slightly harder to achieve during this pandemic as nearly half of the respondents continue to expect a decline in profits in the Jul-Sep quarter after a majority of them (76 percent) experienced this in the preceding quarter.