MSI Global Feelgood Index Reveals Light at End of Tunnel for World Economy as U.S. Economic Outlook Improves
MSI Global Alliance’s May 2012 quarterly business confidence survey shows that while the Eurozone continues to languish, the U.S. economic recovery continues. But although the balance of global confidence is rising steadily, the need for caution remains.
Research into business confidence worldwide from the leading international association of professional services firms MSI Global Alliance shows that economic prospects are beginning to look brighter for some regions, but certainly not all.
“Finally there is a hint of light at the end of the tunnel -economic activity has picked up noticeably in recent months in the USA, pulling along with it a number of its major trading partners,” commented Joe Nellis, Professor of International Management Economics at Cranfield School of Management.
The same can however not be said for the Eurozone area, which according to Nellis, ” […] is still plagued by a sovereign debt crisis and a banking sector that continues to deleverage.” Nellis adds: “Fiscal austerity measures are also putting downward pressure on domestic demand in many areas. Several EU countries are now, officially, in a (mild) double-dip recession. This situation, however, should start to ease gradually from mid-2012 onwards.”
Chart: MSI Global Feelgood IndexLevels of Business Confidence by World RegionComparison between February and May 2012Description: Tags: Author: charts powered by iCharts
The MSI Global Feelgood Index, which uses weighted averages of seven key business performance indicators, indicates that the balance of confidence at the global level still remains delicately balanced, but is in gradually improving, positive territory (+0.16). The comparative figure was+0.10in February 2012.
The North American Region experienced a further small improvement in business confidence, in line with the more optimistic economic outlook being reported by many organisations, with the region’s Feelgood Index rising from+0.22to+0.24. There is particular optimism around the prospects for new sales.
The balance of confidence has fallen yet again across Western Europe as a whole and now stands at-0.06compared to-0.04three months ago. Confidence in profit margins has sunk further in the last three months from -0.17to-0.27. Professor Nellis comments: “The situation in Western Europe is likely to be fragile for several months while economic uncertainty hangs over a number of countries.”
Rest of the World
The survey shows the most noticeable upswing in confidence over the last three months occurred in Eastern Asia (a change from-0.05to+0.24) and in the Indian Region (up from-0.01to+0.23), with businesses feeling distinctly more upbeat due to the improving economic conditions.
Southern Africa also reported a marked improvement in confidence over the same period, up from+0.04three months ago to+0.15this quarter. However, the balance of confidence in the Middle East & North Africa Region has now moved into negative territory(-0.01)for the first time since the launch of the MSI Global Alliance Feelgood Index, falling from a figure of+0.07in the last quarter.
Over the last three months, businesses in the Australia & New Zealand region have become marginally more optimistic about their prospects, with the Feelgood Index for the region rising to-0.01(from-0.03in the last quarter), moving the region slightly closer to a more positive position.
Nellis concludes: “According to the latest forecast from the IMF, the advanced economies are expected to grow by only around 1.5% in 2012 with momentum picking up in 2013. On the other hand, the emerging markets and developing nations will continue to forge ahead in 2012 – the IMF is expecting them to grow by at least 6% this year with India and China doing particularly well. The findings of MSI’s latest Global Feelgood Index mirror these forecasts and show that for the most part, developed nations will continue to lag far behind developing countries in terms of growth as they struggle for confidence in continuing difficult conditions.”
A video showing the views of MSI's European members on the business sentiment in their countries is also now available.
Note to Editors
Each quarter, the MSI Global Feelgood Index surveys business owners and managers in over 100 countries on their levels of optimism regarding seven key areas of business: sales pipeline, profit margins, cash flow, spending on investment capital, staff numbers, spending on marketing and advertising, and spending on staff training and welfare.
From the period 10 -30 April 2012, participants were asked to state their level of optimism or pessimism for each of the seven key areas of business. The responses were then collated and weighted to reflect the size of the different economies in the responding countries, before being analysed by Joe Nellis, Professor of International Management Economics at Cranfield School of Management, a leading international business school based in the UK.
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