KUALA LUMPUR: Economists believe the latest positive business confidence indicators out of the Department of Statistics Malaysia (DOSM) could be signaling a change of fortune for businesses, especially those in the construction sector.
The DOSM business confidence indicator pointed out that businesses are anticipating improved conditions in the fourth quarter of the year.
The confidence indicator increased by 3.2 per cent for the fourth quarter (Q4) 2023, up from 0.7 per cent in Q3 2023.
The services, industry, and construction sectors anticipate better business conditions in the fourth quarter of 2023.
With sentiments within the construction sector especially taking on a positive trajectory for the first time since the first quarter of 2018 by posting +1.7 per cent as against -26.9 per cent in the third quarter of 2023.
Looking ahead, the business outlook for the period of October 2023 until March 2024 remain upbeat despite moderating, with a net balance of +9.8 per cent as against +13.9 per cent recorded previously, with all sectors registering positive outlooks except the wholesale and retail trade.
Sentiments in services sector remain positive, with a net balance of +19.0 per cent.
For the next six months, all sub-sectors under services sector anticipate a positive business environment. Industry sector also foresees a brighter business outlook, with a net balance of +7.5 per cent for the period of October 2023 until March 2024. After soaring to a positive trajectory for the second half of 2023, the construction sector keeps improving significantly, with a net balance of +27.6 per cent for the upcoming six months.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the numbers provide the expectation that businesses are taking a positive attitude. This is despite the challenges like global uncertainties, escalating material prices, and intense competition.
"Therefore, with the right policy, I think the Malaysian economy should be able to record respectable growth next year. "We know for certain that the fiscal policies remain expansionary and the overnight policy rate (OPR) has remained stabilised. "Therefore, this could be something positive for the Malaysian economy," he told the Business Times today.
Putra Business School economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff said a surge in business confidence, is attributable to positive macro indicators.
He said these factors include a low unemployment rate boosting household spending, a favorable three per cent OPR fostering affordable financing, and increased foreign direct investment (FDI) signaling heightened confidence from international investors." I believe the trend will continue for the next quarter," he added.
"The sectors in the positive this time i.e. services, construction, agriculture are a reflection of the domestic economy's high contribution to the gross domestic product (GDP) output, as for the manufacturing sector albeit slower in growth but is expected to be better in view of the manufacturing supply chain cycle with received orders on upward trajectory to fill up the inventory," Universiti Kuala Lumpur Business School economic analyst Associate Professor Aimi Zulhazmi Abdul Rashid told Business Times.