Industrial Outlook Survey of the Manufacturing Sector for Q3:2019-20 (Revised)

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પ્રકાશિત તારીખ ફેબ્રુઆરી 06, 2020

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Industrial Outlook Survey of the Manufacturing Sector for Q3:2019-20 (Revised)

Today, the Reserve Bank released the results of the 88th round of the Industrial Outlook Survey (IOS) conducted during October-December, 2019. The survey encapsulates qualitative assessments of the business climate by companies in India’s manufacturing sector for Q3:2019-20 and their expectations for Q4:2019-20¹. In all, 775 companies responded in this round of the survey.

Highlights:

A. Assessment for Q3: 2019-20

Order inflows and output staged an uptick in Q3:2019-20, reflecting some turnaround from negative sentiments exhibited in the previous quarter, but the sentiments on employment conditions remained weak.
Consistent with the weak global demand conditions, manufacturers assessed sluggish external demand in Q3:2019-20.
Sentiments on overall financial situation, which had dipped in the previous survey round, moved into the zone of optimism.
Assessment of cost pressures emanating from interest payments on borrowings, purchase of raw materials and salary expenses softened in Q3:2019-20, but that for profit margins continued to be subdued due to weak demand and negative sentiments on selling prices.
The Business Assessment Index (BAI)² was at 93.0 in Q3:2019-20, slightly higher than the earlier print of 92.5 for Q2:2019-20.

B. Expectations for Q4: 2019-20

Going forward, respondents expect improvement in demand parameters such as production, order books and exports in Q4:2019-20. Expectations on employment have also improved, though marginally.
Manufacturers remain optimistic on the overall financial situation in Q4:2019-20.
With lower optimism on selling prices, manufacturers expect a drop in profit margins despite muted cost pressures.
Business Expectations Index (BEI) increased from 102.2 in Q3:2019-20 to 105.0 in Q4:2019-20.

Summary Table Net responses³
(per cent)
Parameters	Assessment period		Expectations period
Parameters	Q2:2019-20	Q3:2019-20	Q3:2019-20	Q4:2019-20
Production	-1.9	0.4	13.9	17.2
Order Books	-2.8	0.3	13.9	16.6
Pending Orders	21.0	22.1	14.4	15.9
Capacity Utilisation	-9.0	-8.3	4.4	7.9
Exports	0.0	-0.9	7.3	8.6
Imports	1.5	0.9	6.4	5.4
Employment	-0.9	-1.6	0.7	1.8
Financial Situation (Overall)	-1.1	5.3	15.8	19.5
Availability of Finance (from internal accruals)	6.9	6.6	13.2	13.4
Availability of Finance (from banks and other sources)	4.3	7.2	12.7	11.7
Availability of Finance (from overseas, if applicable)	2.8	2.5	5.1	3.0
Cost of Finance	-13.1	-8.7	-10.0	-7.9
Cost of Raw Materials	-35.3	-26.1	-30.8	-30.0
Salary/ Other Remuneration	-36.0	-27.0	-23.2	-22.1
Selling Price	-7.6	-9.6	4.6	2.2
Profit Margin	-22.6	-22.1	-8.5	-10.2
Overall Business Situation	-0.8	3.5	21.7	22.6
Note: Please see the excel file for time series data

Table 1: Assessment and Expectations for Production
(Percentage responses)@
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	38.2	13.3	48.5	24.9	41.6	9.0	49.4	32.5
Q4:2018-19	1,258	40.2	14.9	44.9	25.3	43.5	7.2	49.3	36.3
Q1:2019-20	1,231	38.6	15.6	45.8	23.0	42.1	9.3	48.5	32.8
Q2:2019-20	481	26.5	28.4	45.2	-1.9	40.1	11.0	48.9	29.1
Q3:2019-20	775	28.7	28.3	43.1	0.4	34.8	21.0	44.2	13.9
Q4:2019-20						35.4	18.2	46.4	17.2
‘Increase’ in production is optimistic. @: Due to rounding off percentage may not add up to 100.

Table 2: Assessment and Expectations for Order Books
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	35.3	15.8	48.9	19.5	38.6	9.6	51.8	28.9
Q4:2018-19	1,258	35.3	15.9	48.8	19.5	41.0	8.5	50.5	32.5
Q1:2019-20	1,231	34.1	15.4	50.5	18.8	38.5	8.6	52.8	29.9
Q2:2019-20	481	27.4	30.2	42.5	-2.8	31.6	11.1	57.3	20.5
Q3:2019-20	775	26.9	26.6	46.5	0.3	34.3	20.4	45.3	13.9
Q4:2019-20						33.6	17.0	49.3	16.6
‘Increase’ in order books is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 3: Assessment and Expectations for Pending Orders
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Above Normal	Below Normal	Normal	Net response	Above Normal	Below Normal	Normal	Net response
Q3:2018-19	1,267	4.7	13.2	82.1	8.6	7.4	11.0	81.6	3.6
Q4:2018-19	1,258	5.1	14.3	80.6	9.2	6.3	9.9	83.8	3.6
Q1:2019-20	1,231	6.0	15.7	78.3	9.6	6.1	10.4	83.5	4.3
Q2:2019-20	481	4.5	25.5	70.0	21.0	16.1	9.4	74.5	-6.7
Q3:2019-20	775	3.4	25.5	71.1	22.1	3.9	18.3	77.8	14.4
Q4:2019-20						3.7	19.5	76.8	15.9
Pending orders ‘Below Normal’ is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 4: Assessment and Expectations for Capacity Utilisation (Main Product)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	24.9	12.3	62.8	12.6	28.3	7.3	64.4	21.0
Q4:2018-19	1,258	26.2	13.3	60.5	12.8	30.3	6.5	63.1	23.8
Q1:2019-20	1,231	22.8	13.4	63.8	9.4	27.2	7.7	65.1	19.6
Q2:2019-20	481	15.9	24.9	59.2	-9.0	23.1	9.2	67.7	13.9
Q3:2019-20	775	17.5	25.8	56.7	-8.3	24.4	20.0	55.6	4.4
Q4:2019-20						23.1	15.2	61.6	7.9
‘Increase’ in capacity utilisation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 5: Assessment and Expectations for Level of CU (compared to the average in last 4 quarters)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Above Normal	Below Normal	Normal	Net response	Above Normal	Below Normal	Normal	Net response
Q3:2018-19	1,267	10.1	12.9	76.9	-2.8	12.5	9.1	78.4	3.4
Q4:2018-19	1,258	11.6	13.0	75.3	-1.4	12.7	8.6	78.7	4.1
Q1:2019-20	1,231	9.6	14.8	75.7	-5.2	12.2	8.2	79.6	4.0
Q2:2019-20	481	8.1	26.6	65.3	-18.6	9.2	8.8	82.0	0.3
Q3:2019-20	775	6.6	26.9	66.5	-20.3	9.3	21.7	69.0	-12.4
Q4:2019-20						7.9	18.5	73.6	-10.6
‘Above Normal’ in Level of capacity utilisation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 6: Assessment and Expectations for Assessment of Production Capacity (with regard to expected demand in next 6 months)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	More than adequate	Less than adequate	Adequate	Net response	More than adequate	Less than adequate	Adequate	Net response
Q3:2018-19	1,267	10.3	7.2	82.5	3.0	11.9	6.3	81.8	5.6
Q4:2018-19	1,258	11.2	7.4	81.4	3.8	10.6	6.1	83.3	4.5
Q1:2019-20	1,231	11.0	6.7	82.2	4.3	12.2	6.2	81.6	6.0
Q2:2019-20	481	15.1	14.2	70.7	0.9	13.5	6.9	79.6	6.6
Q3:2019-20	775	15.8	11.7	72.5	4.2	15.3	12.4	72.2	2.9
Q4:2019-20						14.6	11.4	74.0	3.2
‘More than adequate’ in Assessment of Production Capacity is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 7: Assessment and Expectations for Exports
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	25.1	13.0	61.9	12.1	26.1	10.2	63.7	15.9
Q4:2018-19	1,258	25.0	12.0	63.0	13.0	27.8	8.0	64.2	19.8
Q1:2019-20	1,231	24.6	11.5	64.0	13.1	25.7	8.0	66.2	17.7
Q2:2019-20	481	21.3	21.3	57.5	0.0	24.0	8.2	67.8	15.8
Q3:2019-20	775	18.3	19.2	62.5	-0.9	24.3	17.0	58.7	7.3
Q4:2019-20						22.4	13.8	63.9	8.6
‘Increase’ in exports is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 8: Assessment and Expectations for Imports
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	20.1	8.5	71.4	11.6	19.3	7.1	73.6	12.2
Q4:2018-19	1,258	19.7	8.7	71.6	10.9	21.0	5.3	73.7	15.7
Q1:2019-20	1,231	18.2	8.3	73.4	9.9	19.2	6.2	74.6	13.0
Q2:2019-20	481	16.0	14.5	69.6	1.5	18.4	7.4	74.2	11.1
Q3:2019-20	775	13.2	12.3	74.5	0.9	18.1	11.7	70.2	6.4
Q4:2019-20						15.7	10.2	74.1	5.4
‘Increase’ in imports is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 9: Assessment and Expectations for level of Raw Materials Inventory
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Above average	Below average	Average	Net response	Above average	Below average	Average	Net response
Q3:2018-19	1,267	14.3	4.6	81.0	-9.7	11.3	4.6	84.1	-6.7
Q4:2018-19	1,258	14.9	5.5	79.6	-9.5	12.1	4.2	83.8	-7.9
Q1:2019-20	1,231	13.9	5.7	80.4	-8.3	12.0	3.7	84.3	-8.3
Q2:2019-20	481	17.1	8.4	74.5	-8.6	11.8	4.2	84.0	-7.7
Q3:2019-20	775	13.9	7.7	78.4	-6.2	13.2	6.6	80.3	-6.6
Q4:2019-20						10.6	7.0	82.4	-3.6
‘Below average’ Inventory of raw materials is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 10: Assessment and Expectations for level of Finished Goods Inventory
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Above average	Below average	Average	Net response	Above average	Below average	Average	Net response
Q3:2018-19	1,267	15.0	4.9	80.1	-10.0	10.8	5.2	83.9	-5.6
Q4:2018-19	1,258	14.4	6.5	79.1	-7.9	11.1	4.6	84.3	-6.5
Q1:2019-20	1,231	13.5	6.7	79.8	-6.8	10.5	4.9	84.6	-5.6
Q2:2019-20	481	22.5	8.0	69.5	-14.5	13.0	6.0	81.0	-7.0
Q3:2019-20	775	18.3	7.3	74.4	-11.0	15.7	5.0	79.3	-10.7
Q4:2019-20						12.9	6.2	80.9	-6.7
‘Below average’ Inventory of finished goods is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 11: Assessment and Expectations for Employment Outlook
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	16.1	6.7	77.1	9.4	17.1	4.2	78.7	12.9
Q4:2018-19	1,258	16.7	6.9	76.5	9.8	17.0	4.8	78.2	12.2
Q1:2019-20	1,231	15.9	7.3	76.8	8.6	17.1	4.8	78.1	12.3
Q2:2019-20	481	13.4	14.2	72.4	-0.9	16.6	5.7	77.7	10.9
Q3:2019-20	775	12.2	13.8	74.0	-1.6	12.1	11.4	76.5	0.7
Q4:2019-20						12.5	10.7	76.8	1.8
‘Increase’ in employment is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 12: Assessment and Expectations for Overall Financial Situation
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Better	Worsen	No change	Net response	Better	Worsen	No change	Net response
Q3:2018-19	1,267	28.5	11.9	59.6	16.5	34.4	7.5	58.0	26.9
Q4:2018-19	1,258	29.3	11.4	59.3	17.8	35.2	6.5	58.3	28.7
Q1:2019-20	1,231	29.7	8.6	61.7	21.1	35.0	5.7	59.3	29.3
Q2:2019-20	481	21.2	22.2	56.6	-1.1	34.3	6.1	59.6	28.3
Q3:2019-20	775	24.6	19.3	56.1	5.3	30.6	14.8	54.7	15.8
Q4:2019-20						31.2	11.7	57.1	19.5
‘Better’ overall financial situation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 13: Assessment and Expectations for Working Capital Finance Requirement
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	30.5	5.6	63.9	24.9	30.6	4.0	65.4	26.6
Q4:2018-19	1,258	30.8	4.6	64.6	26.2	29.9	4.4	65.7	25.6
Q1:2019-20	1,231	28.5	5.4	66.1	23.2	29.6	4.1	66.3	25.6
Q2:2019-20	481	28.4	10.7	60.9	17.7	27.7	5.5	66.8	22.1
Q3:2019-20	775	27.4	8.7	63.9	18.7	29.3	5.5	65.3	23.8
Q4:2019-20						27.3	5.7	66.9	21.6
‘Increase’ in working capital finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 14: Assessment and Expectations for Availability of Finance (from Internal Accruals)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Improve	Worsen	No change	Net response	Improve	Worsen	No change	Net response
Q3:2018-19	1,267	21.2	10.4	68.4	10.8	24.9	6.7	68.3	18.2
Q4:2018-19	1,258	22.8	7.5	69.6	15.3	25.4	6.2	68.4	19.2
Q1:2019-20	1,231	23.2	7.2	69.6	16.0	25.5	5.0	69.5	20.5
Q2:2019-20	481	19.6	12.7	67.7	6.9	23.0	5.7	71.3	17.3
Q3:2019-20	775	19.0	12.4	68.6	6.6	21.4	8.1	70.5	13.2
Q4:2019-20						22.1	8.8	69.1	13.4
‘Improvement’ in availability of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 15: Assessment and Expectations for Availability of Finance (from banks and other sources)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Improve	Worsen	No change	Net response	Improve	Worsen	No change	Net response
Q3:2018-19	1,267	17.2	6.0	76.8	11.2	19.0	5.9	75.1	13.1
Q4:2018-19	1,258	17.8	7.0	75.2	10.8	20.1	4.1	75.8	16.0
Q1:2019-20	1,231	17.9	6.0	76.1	11.9	19.3	5.0	75.7	14.2
Q2:2019-20	481	14.3	10.0	75.8	4.3	17.4	4.4	78.2	13.0
Q3:2019-20	775	14.6	7.4	78.1	7.2	18.7	6.0	75.3	12.7
Q4:2019-20						17.7	5.9	76.4	11.7
‘Improvement’ in availability of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 16: Assessment and Expectations for Availability of Finance (from overseas, if applicable)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Improve	Worsen	No change	Net response	Improve	Worsen	No change	Net response
Q3:2018-19	1,267	6.9	4.0	89.1	2.9	9.5	4.3	86.2	5.2
Q4:2018-19	1,258	8.6	3.9	87.6	4.7	9.0	3.0	88.0	6.0
Q1:2019-20	1,231	8.2	4.0	87.8	4.3	9.5	3.5	87.0	6.0
Q2:2019-20	481	6.9	4.1	89.1	2.8	13.1	3.5	83.5	9.6
Q3:2019-20	775	7.5	5.0	87.6	2.5	9.2	4.1	86.7	5.1
Q4:2019-20						7.3	4.3	88.4	3.0
‘Improvement’ in availability of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 17: Assessment and Expectations for Cost of Finance
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	24.9	5.4	69.7	-19.5	24.7	4.9	70.4	-19.8
Q4:2018-19	1,258	21.3	5.6	73.1	-15.7	22.3	4.8	73.0	-17.5
Q1:2019-20	1,231	22.4	4.9	72.7	-17.6	20.2	5.8	74.0	-14.4
Q2:2019-20	481	21.3	8.1	70.6	-13.1	22.5	7.1	70.4	-15.4
Q3:2019-20	775	16.9	8.2	74.9	-8.7	18.5	8.4	73.1	-10.0
Q4:2019-20						15.0	7.1	77.9	-7.9
‘Decrease’ in cost of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 18: Assessment and Expectations for Cost of Raw Materials
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	53.1	3.9	43.1	-49.2	46.5	1.9	51.6	-44.5
Q4:2018-19	1,258	46.8	4.8	48.4	-41.9	42.1	3.5	54.3	-38.6
Q1:2019-20	1,231	46.4	3.1	50.5	-43.3	37.2	3.5	59.2	-33.7
Q2:2019-20	481	42.4	7.1	50.5	-35.3	31.4	3.8	64.8	-27.6
Q3:2019-20	775	37.2	11.1	51.7	-26.1	37.0	6.2	56.8	-30.8
Q4:2019-20						35.6	5.6	58.8	-30.0
‘Decrease’ in cost of raw materials is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 19: Assessment and Expectations for Salary/Other Remuneration
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	29.8	1.6	68.6	-28.2	25.6	1.2	73.2	-24.4
Q4:2018-19	1,258	28.5	1.8	69.7	-26.7	22.8	1.4	75.8	-21.4
Q1:2019-20	1,231	38.8	1.6	59.6	-37.2	34.0	1.1	64.9	-32.9
Q2:2019-20	481	38.6	2.6	58.8	-36.0	34.5	0.9	64.6	-33.7
Q3:2019-20	775	38.6	2.6	58.8	-36.0	34.5	0.9	64.6	-33.7
Q4:2019-20						25.0	1.8	73.2	-23.2
‘Decrease’ in Salary / other remuneration is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 20: Assessment and Expectations for Selling Price
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	19.9	13.7	66.4	6.2	21.0	6.7	72.3	14.3
Q4:2018-19	1,258	17.5	13.1	69.3	4.4	19.4	7.1	73.5	12.3
Q1:2019-20	1,231	17.1	10.5	72.4	6.6	19.5	8.5	72.0	11.0
Q2:2019-20	481	13.8	21.4	64.8	-7.6	15.5	8.4	76.1	7.1
Q3:2019-20	775	12.0	21.6	66.4	-9.6	18.6	14.0	67.3	4.6
Q4:2019-20						15.2	13.0	71.9	2.2
‘Increase’ in selling price is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 21: Assessment and Expectations for Profit Margin
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q3:2018-19	1,267	16.1	27.8	56.1	-11.7	17.1	17.0	65.9	0.1
Q4:2018-19	1,258	16.2	25.5	58.3	-9.3	18.7	16.7	64.5	2.0
Q1:2019-20	1,231	16.1	24.1	59.8	-8.0	17.8	17.0	65.1	0.8
Q2:2019-20	481	13.5	36.1	50.4	-22.6	21.9	14.5	63.6	7.4
Q3:2019-20	775	12.3	34.4	53.3	-22.1	17.6	26.1	56.3	-8.5
Q4:2019-20						16.3	26.4	57.3	-10.2
‘Increase’ in profit margin is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 22: Assessment and Expectations for Overall Business Situation
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Better	Worsen	No change	Net response	Better	Worsen	No change	Net response
Q3:2018-19	1,267	34.9	10.3	54.8	24.6	43.3	7.0	49.8	36.3
Q4:2018-19	1,258	33.9	11.5	54.7	22.4	43.2	6.5	50.3	36.7
Q1:2019-20	1,231	35.1	10.5	54.4	24.6	42.5	5.6	51.9	36.9
Q2:2019-20	481	24.5	25.4	50.1	-0.8	41.1	6.0	52.9	35.2
Q3:2019-20	775	26.4	22.9	50.8	3.5	37.3	15.6	47.1	21.7
Q4:2019-20						35.8	13.2	50.9	22.6
‘Better’ Overall Business Situation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 23: Business Sentiments
Quarter	Business Assessment Index (BAI)	Business Expectations Index (BEI)
Q3:2018-19	107.1	115.0
Q4:2018-19	107.2	116.2
Q1:2019-20	108.4	113.5
Q2:2019-20	92.5	112.8
Q3:2019-20	93.0	102.2
Q4:2019-20		105.0

¹ The survey results reflect the views of the respondents, which are not necessarily shared by the Reserve Bank of India. The results of the 87th round of the survey (Q2:2019-20) were released on October 4, 2019 on the RBI’s website.

² For each of the survey round, two indices are computed - one based on assessment [viz., Business Assessment Index (BAI)] and another based on expectations [viz., Business Expectations Index (BEI)]. Each indicator for is calculated as a weighted net response of nine business indicators, weights being the share of industry groups in GVA. The nine indicators considered are: (1) overall business situation; (2) production; (3) order books; (4) inventory of raw material; (5) inventory of finished goods; (6) profit margins; (7) employment; (8) exports; and (9) capacity utilisation. BAI/BEI gives a snapshot of the business outlook in every quarter and takes values between 0 and 200, with 100 being the threshold separating expansion from contraction.

³ Net Response (NR) is the difference in percentage of the respondents reporting optimism and that reporting pessimism. The range is -100 to 100. Any value greater than zero indicates expansion/optimism and any value less than zero indicates contraction/pessimism. NR = (I – D), where, I is the percentage response of ‘Increase/optimism’, and D is the percentage response of ‘Decrease/pessimism’ and E is the percentage response as ‘no change/Equal’; I+D+E=100. For example, increase in production is optimism whereas decrease in cost of raw material is optimism.