Dun & Bradstreet Global Business Optimism Insights

Dun & Bradstreet Global Business Optimism Insights Report Shows Businesses were Regaining Confidence in Economic and Financial Conditions Prior to the Middle East Conflict

Dun & Bradstreet (NYSE:DNB), a leading global provider of business decisioning data and analytics, today released its quarterly Global Business Optimism Insights report. The forward-looking report found that prior to the outbreak of the Israel-Hamas conflict businesses worldwide were cautiously optimistic about the resilience of the global economy in Q4 2023 compared with earlier expectations.

The report gauges the optimism levels of businesses around the world and provides an early and comprehensive view of the thinking behind the growth, operational, and investment expectations of business leaders. This quarter’s respondents were surveyed in September, prior to the current conflict in the Middle East.

The overall business optimism index has marginally increased but remains near Q2 2023 levels, indicating a stabilization. The increase in financial confidence may be indicative of the widespread belief that the interest rate cycle has peaked heading into 2024. Further, while the survey paints a positive outlook for supply chain continuity, it is important to note that the improvements are somewhat directional.

“The survey results suggest, despite elevated interest rates across markets, businesses worldwide were becoming cautiously optimistic about Q4 2023,” said Neeraj Sahai, President, Dun & Bradstreet International. “However, since the outbreak of the Israel-Hamas conflict, there is considerable political uncertainty in the world, and it will be important to monitor its effect on global business optimism over the next few quarters and interpret these results with these emerging issues in mind.”

Key findings from the five indices reveal:

The stability in the Global Business Optimism Index reflects that prior to the outbreak of the Israel-Hamas conflict, businesses were cautiously optimistic about the resilience of the global economy in Q4 2023 compared with earlier expectations. Optimism levels in emerging economies continue to be higher than in advanced economies. Nearly two in five businesses expect growth to come from new customers and geographies.
The Global Business Supply Chain Continuity Index increased 1.1% in Q4 2023, indicating a stable outlook compared with the previous quarter. However, ongoing challenges caused by geopolitical tensions (including potential disruption from the Israel-Hamas conflict), labor disputes, and disruptions in key global trade routes remain downside risks.
The Global Business Financial Confidence Index increased 4.2% in Q4 2023 compared with Q3 2023, suggesting higher confidence among businesses to cope with tighter financial conditions. Businesses are expected to contend with varying degrees of pressure stemming from high borrowing costs, elevated debt levels, and cost-of-living crises, leading to increased risk of bankruptcy.
The Global Business Investment Confidence Index declined 0.6% in Q4 2023, compared with Q3 2023. The pull back could be attributed to inventory buildup, with about 20% of businesses globally reporting ‘significantly above normal’ inventory of finished goods, which for U.S., Mexican, UK, and Swedish businesses was more than 30% above normal. High inventory levels could result in lower prices and reduced margins.
The Global Business ESG Index declined 4.7% in Q3 2023 from the previous quarter, signaling shifting priorities for businesses, which are trying to maintain a delicate balance between their short-term financial obligations and ESG commitments.

“The Israel-Hamas conflict could derail the nascent business optimism for Q4 2023. Despite businesses worldwide maintaining a cautious sense of hope in the face of geopolitical tensions and elevated interest rates, the conflict’s impact remains a cause for concern. The future trajectory of global business optimism will heavily depend on how this ongoing conflict unfolds and its broader implications for businesses worldwide,” said Arun Singh, Global Chief Economist, Dun & Bradstreet.

The report is an amalgamation of five indices for 32 economies including the Global Business Optimism Index, Global Business Supply Chain Continuity Index, Global Business Financial Confidence Index, Global Business Investment Confidence Index, and Global Business ESG Index. The five indices were created by synthesizing findings from a survey of approximately 10,000 businesses alongside insights from Dun & Bradstreet, leveraging the firm’s proprietary data and economic expertise. These indices reflect the overall business optimism and expectations about supply chain continuity, financial and investment conditions and Environmental, Social and Governance (ESG). The indices range from 0 to 100, with a reading above 50 indicating an improvement and below 50 a deterioration in optimism.

View the full report here.