Business confidence in Malaysia has remained marginally optimistic for Q3 2017. According to Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study, overall BOI inched slightly from +3.07 percentage points in Q2 2017 to +3.40 percentage points in Q3 2017. On a year-on-year basis, BOI eased from +4.42 percentage points in Q3 2016 to +3.40 percentage points in Q3 2017.

The six business indicators under the quarterly BOI study include volume of sales, net profits, selling price, inventory level, employees and new orders. This is the 18 D&B BOI study being released in Malaysia.

According to D&B Malaysia, 3 of six indicators have moderated upwards on a quarter-on-quarter (q-o-q) basis.
•  Volume of sales rose from +2.99 percentage points in Q2 2017 to +3.88 percentage points in Q3 2017.
•  Net profits have remained in the contractionary zone, moderating downwards from -3.48 percentage 
points in Q2 2017 to -3.88 percentage points in Q3 2017.
•  Selling price has tumbled from +10.95 percentage points in Q2 2017 to +2.91 percentage points in Q3 
2017.
•  New orders rose from +3.48 percentage points in Q2 2017 to +8.74 percentage points in Q3 2017.
•  Inventory levels have moderated downwards from +4.98 percentage points in Q2 2017 to +4.85 
percentage points in Q3 2017.
•  Employment levels have rebounded into the expansionary zone from -0.49 percentage points in Q2 
2017 to +3.88 percentage points in Q3 2017. 
On a year-on-year (y-o-y) basis, 3 of six business indicators have improved for Q3 2017.
•  Selling price increased moderately from +0.5 percentage points in Q3 2016 to +2.91 percentage points 
in Q3 2017.
•  Inventory levels climbed from +1.5 percentage points in Q3 2016 to +4.85 percentage points in Q3 
2017 while employment levels jumped from +3.0 percentage points in Q3 2016 to +3.88 percentage 
points in Q3 2017.
•  Volume of sales dropped from +6.0 percentage points in Q3 2016 to +3.88 percentage points in Q3 
2017.
•  New orders fell slightly from +9.0 percentage points in Q3 2016 to +8.74 percentage points in Q3 2017.
•  Net profits fell into the contractionary zone from +6.50 percentage points in Q3 2016 to -3.88 
percentage points in Q3 2017. 
Sectoral Outlook 
3 sectors have emerged as the most optimistic with 5 indicators each in the positive region. According to D&B Malaysia, the services, transportation and agricultural sectors were most upbeat for Q3 2017. 
Services 
Despite the optimistic outlook for the services sector, 4 of six indicators have moderated downwards.
•  Volume of sales slipped from +6.49 percentage points in Q2 2017 to +5.13 percentage points in Q3 
2017.
•  Selling price eased from +3.90 percentage points in Q2 2017 to +1.28 percentage points in Q3 2017.
•  New orders dropped from +15.58 percentage points in Q2 2017 to +7.69 percentage points in Q3 
2017.
•  Inventory levels moderated downwards from +6.49 percentage points in Q2 2017 to +3.85 percentage 
points in Q3 2017.
•  Employment levels jumped from +1.30 percentage points in Q2 2017 to +5.13 percentage points in Q3 
2017.
•  Net profits remained contractionary climbing from -5.20 percentage points in Q2 2017 to -1.28 
percentage points in Q3 2017.

“The continued optimism displayed by Malaysian businesses in Q3 2017, particularly in the services sector was largely due to the spurt in private investment growth, firmer private consumption and higher government spending, which in turn have fuelled domestic demand. Credit growth has remained buoyant with manufacturing and transportation sectors recording the fastest growth. However, some measure of fiscal restraint will weigh on the Malaysian economy in the coming quarters as the government strives to keep its budget deficit target to 3% of GDP for FY2017.“

“The recent downward moderation of commodity prices has also posed downside risks to the growth outlook given that Malaysia is a large net oil exporter and producer of other commodities. Hence, we anticipate sentiments within the mining sector to remain muted.”