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        Home > Textile News > China's biz confidence climbs back to decade-high in Feb 2023: Survey

        China's biz confidence climbs back to decade-high in Feb 2023: Survey

        Published: 2023-03-15

        China’s business confidence rebounded to a decade-high in February 2023, mainly due to the recent roll back of COVID-19 containment measures and the country’s return to more normal business conditions, according to the S&P Global China Business Outlook survey. Optimism around the 12-month outlook for output rose notably from that seen last October.

        Expectations regarding future employment and profitability also improved markedly at the start of 2023. At the same time, firms anticipate stronger increases in input costs and selling prices, but inflationary pressures are set to remain weak in the context of global data.

        At 34 per cent in February, the net balance of Chinese companies that forecast an expansion of output over the next year was up from 10 per cent last October and showed a marked rebound in overall confidence. Notably, the reading was the best seen over the past ten years and among the highest since the survey began in October 2009. Sentiment in China was slightly stronger than the global average, which picked up to a one-year high of 32 per cent in February.

        The easing of pandemic-related restrictions and reduced disruption to operations were cited as key factors supporting optimism around future business activity in the latest survey. These are in turn anticipated to drive further increases in sales and customer numbers, while firms also cited supportive state policies and new product development as potential drivers of growth over the next 12 months.

        When assessing any threats around the outlook, businesses were often concerned over any lingering impacts the pandemic may have on operations, greater market competition, recruitment difficulties and rising costs. Uncertainty over the Russia-Ukraine war, adverse exchange rate movements and relatively subdued foreign demand were also mentioned as factors that could dampen performance.

        Alongside the marked improvement in activity expectations, Chinese companies projected strong job creation over the year ahead. A net balance of 11 per cent of businesses projected an increase to their headcounts over the next 12 months, up from just 2 per cent in October 2022, and the highest reading for eight years.

        Investment intentions also improved in February. The net balance of companies planning to increase capital expenditure rose from 9 per cent last October to 15 per cent in February 2023, the highest since October 2021. At the same time, the net balance of firms anticipating greater research and development spending rose from 8 per cent to a one-year high of 14 per cent in February.

        February data showed that Chinese companies expect input costs and output charges to increase further over the next 12 months. In terms of expenses, a net balance of 16 per cent of firms projected higher staffing costs in February, up from 13 per cent in October 2022 and the highest for a year. The net balance of firms expecting greater non-staff costs meanwhile increased from 10 per cent to 16 per cent in February.

        Turning to selling prices, a net balance of 7 per cent of firms plan to raise their output charges over the next year. This was up from 3 per cent in October and the highest figure for one year.

        Although a greater proportion of firms forecast an upturn in expenses and output prices in the latest survey period, inflationary pressures in China look set to remain much weaker than seen on average globally, the survey added.

        Stronger expectations around activity and demand led to a greater proportion of firms anticipating higher profits over the year ahead. At 21 per cent in February, the respective net balance rose sharply from just 1 per cent in October 2022 to signal the strongest optimism around future profitability for nine years.

        Fibre2Fashion News Desk (DP)


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