While uncertainty is the rule for macroeconomics these days, global business leaders are increasingly aligned in their view of upcoming business prospects.
And that view is a fairly dark one, as this year, companies have been steadily losing confidence in what lies ahead.
According to Dun & Bradstreet’s Global Business Optimism Index, based on a quarterly poll of approximately 10,000 businesses worldwide, the level of optimism heading into the third quarter was down 6.5% from three months earlier. D&B blamed slowing trade, tariff uncertainty and softening sales for the retrenchment.
Other business confidence indices presented by D&B also declined entering the third quarter.
The optimism falloff as reflected in the recent survey, taken in May and June, followed quarterly declines of 12.9% and 1.3% heading into this year’s first and second quarters, respectively.
Less than half (46%) of respondents to the most recent survey anticipated de-escalation of mounting supply chain concerns, whether through formal agreements or informal arrangements.
“While many central banks have begun cutting interest rates, this has yet to translate into better financial conditions,” D&B opined in its new quarterly report.
The business analytics provider added that existing worries about supply chain vulnerabilities and geopolitical risks have worsened recently because of the escalating Iran-Israel conflict and the growing threat of disruption of key trade routes.
To be sure, D&B’s business optimism index is still relatively healthy in one sense. The index reading from the most recent survey was 105.6, with a reading above 100 indicating improved optimism relative to the base year of Q3 2023 through Q2 2024.
Still, the recent significant dip in optimism suggests that businesses may be adopting a more cautious stance as they continue to grapple with the challenging external environment, D&B wrote. It had appeared heading into the second quarter, when optimism fell only slightly compared to the big first-quarter plunge, that “businesses were beginning to adjust to the changing trade environment,” the report said.
The recent decline in optimism was more pronounced in the manufacturing sector (-8.3%) than in the services sector (-5.4%). The most affected manufacturing segments were metals manufacturing (-14.6%), automotives (-12.5%) and capital goods (-11.1%). Those segments are more exposed to shifts in trade policy and global supply chain dependencies, D&B noted.
In India, where metal exports to the United States are significant, optimism among businesses plunged by 23.4%. Businesses in Brazil, another major exporter, suffered a 19.6% decline. Western European metals businesses, long under pressure from U.S. tariffs, reported a 6.6% drop in optimism, according to the report.
“These declines reflect not only the burden of existing tariffs but also rising uncertainty about what the U.S. might do next,” D&B wrote. In contrast, companies in countries with trade protections or exemptions have fared better. Mexico, for instance, has remained relatively insulated thanks to the U.S.-Mexico-Canada Agreement.
