China reports major increase in confidence as Japan slumps to five-year low

HONG KONG, Nov. 06, 2017 (GLOBE NEWSWIRE) — YPO, the premier leadership organization for chief executives in the world, reported today that confidence among business leaders in Asia crept up in the third quarter of 2017 (3Q 2017).

The YPO Global Pulse Confidence Index for Asia climbed 1.3 points to 62.8, making Asia the third most confident region, after the United States (63.5) and Australasia (63.3), remaining firmly in optimistic territory and suggesting that economic conditions in Asia are stable, although there were strong variances among the major economies in the region.

China reported a big upturn in sentiment, jumping 8.8 points to 68.0, its highest level since April 2013, while Japan dropped 3.9 points to 50.6, its lowest level for five years.

Confidence in India remained steady, edging up 0.5 point to 65.9, lower than that of China for the first time in over a year but still positive. The region’s emerging economies showed a definite improvement, and confidence in the Association of Southeast Asian Nations (ASEAN) jumped 3.0 points to 63.8.

“Once again, chief executives across the region remain positive about growth opportunities for in the short- to medium-term,” said YPO member, and CEO and President of PBM Polytex, Amit Gopal Patodia. “With commodity prices continuing to rise and moderate GDP growth forecast for 2018 and beyond, business leaders will be keen to take advantage of the current economic climate. However, they will undoubtedly be keeping a close eye on the socio-political landscape.”

Key findings in Asia

Economic climate in Asia set to improve

The majority of respondents (53%) predicted that business conditions would improve over the next six months, versus only 10% who believed that the economic environment would deteriorate. Regarding the three key indicators of the survey, namely sales, employment and fixed investment, business leaders continued to be optimistic about the prospects for their own organizations over the next 12 months.

Asia was the most confident region in the world for sales outlook, with 63% of respondents expecting to increase revenue over the coming year, and only 5% predicting a decline in turnover.

Employment confidence jumped 3.6 points to 58.9, its highest level since July 2014, with 57% of respondents expecting their workforce to remain the same, over a third (38%) expecting to increase headcount, while 5% predicted cuts. This was an improvement from 2Q 2017, when only 28% predicted a greater headcount 12-months hence.

For fixed investment, confidence climbed 3.6 points to 62.9, reversing most of the 3.9-point decline in the 2Q. Almost half (48%) of respondents expected to increase fixed investment spending, and only 8% predicted a reduction in investment levels.

Key findings in Australasia

Confidence drops, but chief executives remain bullish

Overall confidence in Australasia fell 3.7 points to second place at 63.3, overtaken by the United States (63.5).

However, Australasians are still extremely positive, and 54% expect conditions to improve over the next six months, compared with only 11% who predicted a decline. The remaining 35% believe that economic conditions will remain the same.

When assessing the prospects for their own organisations over the next year, two-thirds (68%) expected to increase sales, and only 5% predicted a decline in revenue.

When it came to hiring, 43% of respondents expected to increase headcount, and 8% predicted cuts. Finally, half (50%) expect to increase fixed investment spend, and only 6% forecasted a decline in investment levels.

Global review

Globally, confidence remained steady at 62.4, now firmly in positive territory for four consecutive surveys, hovering between of 62.0 and 62.5. The United States was the most confident region at 63.5, Canadian confidence also remained positive, declining marginally by 1.1 points to 61.8. In Europe, the mood remained upbeat, as the European Union (EU) slipped slightly by 1.2 points to 61.8, and non-EU Europe edged down 1.7 points to 58.6.

Elsewhere, confidence in Latin America jumped 2.8 points to 62.0, largely driven by Brazil’s 8-point hike in confidence. In Africa, confidence edged up 1.2 points to 57.5, yet it remains the second least-confident region, trailed only by the Middle East and North Africa (MENA) region, where confidence increased 2.5 points to 53.2.

YPO Global Pulse Confidence Index
The quarterly electronic survey, conducted in the first two weeks of October 2017, gathered answers from 925 YPO chief executive officers across the globe, including 103 in Asia and 40 in Australasia. Visit http://www.ypo.org/globalpulse/ for more information about the survey methodology and results from around the world.

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