Businesses more cautious entering first quarter of 2021

KUALA LUMPUR: Businesses are more cautious about their prospects in the first quarter of 2021 (1Q21), in view of the spike in the new Covid-19 cases which led to the re-imposition of the Movement Control Order (MCO) in all states except Sarawak.

This was revealed in the Department of Statistics Malaysia’s (DOSM) Business Tendency Survey, which measures expectations on business performance for the upcoming quarter and six months ahead.

In a statement yesterday, chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the survey had covered businesses in four sectors; namely industry, services, wholesale and retail trade, as well as construction.

“The industry sector is a key sector which showed recovery, although the sentiment remains pessimistic with a confidence indicator of -4.4 per cent in 1Q21, compared with -7.5 per cent in 4Q20.

“The improvement in the confidence indicator is due to better expectations in the agriculture and mining subsectors, with confidence indicators of -6.4 per cent and -24.7 per cent, respectively – against -24.1 per cent and -40.9 per cent, respectively in the last quarter,” he said.

Mohd Uzir said one of the factors that contributed to the improved sentiment in the agriculture subsector is the positive expectation on the crude palm oil price, which is projected to rise this year.

Conversely, the business confidence indicators in the services, wholesale and retail trade, as well as the construction sectors remained low.

“Services and wholesale and retail trade sectors posted confidence indicators of -15.0 per cent and -11.8 per cent, respectively, while (the sentiment) in the construction sector remains unfavourable with the confidence indicator at -51.2 per cent in this quarter as against -39.1 per cent in the previous quarter,” he added. On gross revenue, the survey revealed that 25.5 per cent of respondents expect their gross revenue to increase in 1Q21, while 36.5 per cent predict a reduction.

“Concurrently, 75.9 per cent of establishments expect their number of workforce to remain, while 8.4 per cent of establishments intend to expand their workforce and 15.7 per cent expect to reduce their workforce in the 1Q21,” it added.

According to DoSM, the survey also revealed a moderation in expectations on business prospects for the first half of 2021, but noted that the industry sector remains optimistic about its business performance with a net balance of +4.3 per cent for January - June 2021.

“The construction and wholesale and retail trade sectors also foresee better business outlook despite remaining in negative territory for the upcoming six months, with a net balance of -34.6 per cent and -7.7 per cent, respectively, compared with -50.0 per cent and -29.3 per cent between October 2020 and March 2021.

“The Services sector also anticipates a challenging business performance in the next six months, with a net balance of -11.7 per cent compared with -9.1 per cent for the period of October 2020 till March 2021,” it said.