In May, confidence in the economy remained low as businesses expressed a cautious perspective, likely due to rising fuel and electricity prices, the increasing cost of living, geopolitical issues, and the broader community’s challenges.
The latest Business Confidence Index (BCI) from LMD-PEPPERCUBE, conducted in early May, indicates a slight uptick in economic optimism, marking a shift from the negative sentiment recorded in April.
Approximately 28% of those surveyed anticipate an improvement in the economy over the next year, which is a four-point rise from April’s figures. Additionally, 56% believe the economic conditions will remain stable, reflecting a significant increase of 17 points from the previous month.
Meanwhile, 16% foresee a deterioration in the economy, showing a notable decrease of 21 points compared to April’s results.
Regarding sales volumes, expectations have softened slightly. Only 38% of respondents expect sales to improve in the coming year, down from 43% in the previous month. Conversely, over half (54%) anticipate their sales volumes will remain unchanged, which is an increase of 11 points, while 8% predict a decline in sales, a drop of 6% from the prior month.
Additionally, less than half of the respondents (46%) reported an increase in sales volumes compared to last year, a decrease of four points from April. On the other hand, about 43% noted that their sales remained stable, a three-point rise from April’s 40%. Only 11% experienced a downturn, a slight increase from 10% in the previous month.
Looking ahead to the next quarter, there is cautious optimism, with nearly 39% of participants expecting an uptick in sales volumes, which is a nine-point increase from April’s 30%. Furthermore, 51% of respondents foresee stable sales volumes (up by 3%), while only 10% predict a decline, a significant drop of 12 points from the previous month.
In terms of the investment landscape, confidence dipped in May, with only one respondent rating the outlook as ‘very good,’ compared to 6% in April. However, the percentage of those viewing the future as ‘good’ rose by 15 points to 39%. Meanwhile, 42% characterize the investment climate as ‘fair,’ reflecting a five-point decrease from the prior month.
Moreover, 18% perceive the investment environment as ‘poor’ or ‘very poor,’ which is a four-point decrease from April.
When it comes to employment prospects, 20% of respondents plan to increase their workforce, down four points from the previous month. More than half (69%) intend to keep their staffing levels unchanged, an increase of 4%, while 11% expect to reduce their workforce in the next six months, consistent with the previous month’s figures.
— LMD
Financial Chronicle Biz English | Sri Lanka Business News.
