Global Business Confidence Rebounds at Start of 2012

Michelle Remo, “Big 4″ observer
March 28, 2012 /

KPMG’s Business Outlook survey has shown a renewed business optimism due to forecasted growth over the next 12 months.

A jump in worldwide optimism resulting from improved global economic conditions has businesses preparing for growth in the coming months. According to the latest edition of Pulse – KPMG’s Global Business Outlook Survey, companies are planning for higher levels of investment, greater activity and increased staffing. This renewed outlook sharply contrasts the lows experienced by the global market in late 2011.

The latest survey results show that around 42 percent of manufacturers anticipate output growth during the coming 12 months. This is an improvement from the previous Pulse survey (conducted in October 2011), where only 27 percent of firms surveyed predicted growth. Back in February 2011, the corresponding figures were 53 percent followed by 46 percent in June 2011.

In the service sector, approximately 45 percent of companies anticipate higher activity in a year’s time. In October 2011, around 33 percent of firms predicted growth. In June 2011 it was 38 percent while in February 2011 it was 47 percent.

Commenting on the latest survey findings, Mark A. Goodburn, Global Head of Advisory for KPMG International said, “It would seem that the dark cloud expressed at the close of last year has lifted. While the Euro-zone crisis is far from over, globally, businesses feel as though it is at least under control.

“Additionally, strong gains in the US economy have further bolstered positive sentiment. It is apparent that markets are still vulnerable and businesses will proceed with caution, but considering the data, there is definite reason to be optimistic.”

Service providers are particularly optimistic, many of which are forecasting a growth in activity over the next 12 months. Similarly, in the manufacturing sector, confidence has climbed over the past several months following a steady growth of output.

Leading the rise in global business confidence is a jump in expectations among US companies, reflecting recent signs that the world’s biggest economy is picking up momentum. Business sentiment has also improved in the BRIC area, with Brazilian firms particularly upbeat

“Brazilian manufacturers have risen to the occasion to become the true standout in this most recent survey. While the strong domestic market has helped them weather the storm, anticipated increase in demand from key export markets in the coming months, has clearly buoyed confidence beyond what we saw late last year.” added Goodburn.

The mood in Europe meanwhile, has brightened following recent policy action to contain the region’s debt crisis. Significantly improved feelings of confidence and optimism are apparent in both Germany and the UK. Greece, in stark contrast, posts a further worrying deterioration.

Companies in Japan report little change in confidence, with firms seemingly resigned to continued sub-par growth over the coming year.

In line with forecasts for greater growth in activity, businesses anticipate modest increases in employment and plan to raise staffing levels at a stronger rate than previously reported. Firms in the US are planning the biggest increases in headcounts, followed by those in the BRIC area. Likewise, forecasts for company investment have been scaled up with projected growth set to be strongest in the BRIC region.

Over the next 12 months, global price pressures are expected to rise moderately contributing to a slight upward revision in the forecast rate of services output charge inflation. In the manufacturing sector, faster increases in both input costs and factory gate prices are also expected. The forecasted rates of inflation are broadly in line with the survey’s historical averages.


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