This reduction in confidence led to forecasts of broadly unchanged staffing levels over the year ahead. At the same time, firms projected slower increases in both staff and non-staff costs, while they expect their selling prices to remain broadly unchanged, S&P Global said in a release.
At 15 per cent in February, the net balance of Chinese companies that expect business activity to rise over the year ahead was down from 18 per cent last October to signal a softening of overall confidence, S&P Global said in a release.
Overall optimism among Chinese firms regarding future output growth fell to 15 per cent in February—the second-lowest in four years, a S&P Global survey shows.
It was 18 per cent last October.
Relatively subdued market conditions, intense competition, rising costs and geopolitical uncertainty were cited as key threats to the outlook at the start of 2024.
The figure was the second-lowest recorded since the initial wave of the COVID-19 pandemic in February 2020 (after October 2022). The reading was also the weakest of the BRIC nations and well below the global average of 28 per cent.
Chinese companies that were upbeat that business activity will increase over the next year often attributed this to forecasts of stronger domestic and global economic conditions.
Government policy support, improved tourism, investment in new technology and equipment and the development of new products are also anticipated to lift output.
However, relatively subdued market conditions, intense competition, rising costs and geopolitical uncertainty were cited as key threats to the outlook at the start of 2024.
Hiring intentions remain weak, though overall employment will be broadly unchanged.
Companies operating in China foresee further increases in input costs over the next year, but pared back their projections compared to October.
Although inflationary pressures are forecast to recede, profitability forecasts weakened again in February. At 6 per cent, the net balance of Chinese companies expecting higher profits over the next year slipped from 7 per cent to the lowest since October 2022.
Fibre2Fashion News Desk (DS)
