The latest quarterly report from Dun & Bradstreet highlights a sustained positive trend in the global business outlook, with the Global Business Optimism Index rising 5.4% quarter over quarter.
While there has been continued improvement in business optimism, this report reveals a persistently declining optimism in the Global Supply Chain Continuity Index, which slipped 8% for Q2, following a 6% decline in Q1. The primary reason for this decline is the forced re-routing of shipments due to geopolitical events across major trade routes.
“The continued improvement in overall business optimism indicates that businesses are regaining stability after grappling with inflationary pressures and global monetary tightening,” says Neeraj Sahai, president of Dun & Bradstreet International. “Today's supply chains face unprecedented risks from volatile trade relations, civil unrests, extreme weather, and disasters such as the recent incident in Baltimore. Increasingly businesses are mitigating these risks by leveraging data to identify opportunities for reshoring, nearshoring, and friend shoring.”
Key takeaways:
- One in seven businesses find their operations were impacted by supply chain disruption. However, businesses are adapting by implementing contingency plans and diversifying their supplier base across different regions.
- The Global Business Optimism Index increased 5.4%, with businesses feeling more optimistic about the global macroeconomic environment, particularly regarding inflation. For the first time since the launch of the survey in 2023, businesses are optimistic about input costs, aiding a recovery in optimism for manufacturers globally.
- The Global Supply Chain Continuity Index continues to slip, declining 8% in the quarter. Geopolitical tensions are causing supply chain disruptions across major trade routes, compelling businesses to adopt lengthier alternative routes.
- Nearly one in six businesses are increasing investments in supply chain risk management to mitigate disruptions.
- The Global Business Financial Confidence Index was essentially unchanged for the quarter, falling 0.4%. Firms remain optimistic about operating conditions supporting balance sheets. Among advanced economies, the index fell 2.3% but improved 5.5% for emerging economies.
- The Global Business Investment Confidence Index fell 5.4%. The largest drop in confidence was with small businesses in advanced economies, recording a 17% decline. The index decline signals a realigned consensus that major central banks in advanced economies will begin to start a period of looser monetary policy around mid-year – later than previously anticipated – delaying investment decisions.
- Nearly one in six businesses report that recent geopolitical events have impeded their investment plans.
- The Global Business ESG Index dipped 3%, though firms maintain a favorable view toward adopting sustainability. Environmental, sustainable, geopolitical (ESG) sentiment in both emerging and advanced economies declined 3%, although the former maintains a higher optimism level.
"Optimism regarding input costs has reached an all-time high, contributing to a surge in optimism among manufacturers worldwide, which has increased by 17%,” says Arun Singh, global chief economist, Dun & Bradstreet. "Nevertheless, persistent geopolitical disruptions have made significant impacts on supply chains, and now they may also impede investment decisions. With half of the world set to vote in 2024, businesses are anticipated to closely monitor the evolving policy landscape throughout the year. It is crucial for them to strategically prepare for and navigate these challenges."
