Optimism Driven by Steep Declines in Asia/Pacific

News Release 05 September, 2000

Worldwide Business Optimism Slips,
Driven by Steep Declines in Asia/Pacific

D&B survey finds third-quarter expectations in New Zealand drop dramatically
Overall optimism in Europe holds steady at near-record levels

After surging a quarter ago to the highest level in more than a decade, overall results from Dun & Bradstreet’s latest quarterly survey of international business expectations retreated, driven largely by a steep drop in business optimism in Asia and the Pacific regions.

New Zealand’s D&B Sales Expectation Index was cut in half, falling from 42 points in the second quarter to just 20 points in the third quarter. The Profit Index collapsed even further, falling from 31 points to 5 points.

Dun & Bradstreet’s New Zealand General Manager, Adrian Jones said today the latest Business Expectations Survey confirmed the severity of the current drop in business confidence.

“But the latest figures certainly come as a shock, compounding concern about the New Zealand economy and business environment and the fall in the New Zealand dollar.

At the same time, D&B’s Sales Expectations Index for the Pacific region dropped 16 points to 35, and the Profits Index for the region fell 15 points to 27. Five of the six countries in the region posted declines in their components of both regional indexes. The exception in both cases was Japan, where the Sales Index rose nine points to 41 and the Profits Index rose 10 points to 32.

“Japan continues to dig out of its economic crisis of three years ago,” said Joseph W. Duncan, chief economist of The Dun & Bradstreet Corporation. “Optimism for inventories and selling prices are still depressed but rising, and employment expectations for the country have risen out of negative territory for the first time since the second quarter of 1998.”

The results of the D&B survey of executives in the world’s leading developed countries showed modest overall declines in optimism in Europe and North America, countered by noteworthy increases in optimism in Japan, India, Italy and the U.S.

“If you look behind the numbers, it’s evident that the Pacific is way down, driven by a fall-off in Australia and New Zealand,” said Duncan. “Results from both these countries are frequently volatile and what we may be seeing here is a reaction to local-area issues. What’s important to emphasize is that expectations in Japan are up and that the Asian recovery is proceeding on the whole.”

“D&B’s current survey results also indicate that Europe is hanging firm,” added Duncan. “German expectations were down somewhat in the current quarter, but only compared with their second-quarter results, which were exceedingly strong. Net-net, overall world expectations remain near the highest levels in years, excluding the impact of survey results from selected countries in Asia and the Pacific.”

In Asia, where results from Hong Kong and India make up the indexes, the overall Sales Index slipped five points to 52 and the Profits Index dropped four points to 38. Though down slightly, these indexes remain at record high levels. “Hong Kong is the driving force here,” said Duncan. “More like the Pacific region countries, third-quarter optimism in Hong Kong has slipped across the board, particularly for sales and selling
prices. India, on the other hand, continues to report heightened business optimism, continuing the trend of the second-quarter survey.”

The European Sales and Profits Indexes slipped two points and four points, respectively. Most of the individual countries posted moderate declines, but executives in Italy expressed significant growth in optimism for the third quarter, with the Sales Index rising 10 points to 61 and the Profits Index rising 16 points to 45. Third-quarter optimism slipped slightly for sales in France, but the Selling Prices Index there rose 16 points to 10, driving up profit expectations for the quarter.

Business optimism in North America is generally consistent with the high second-quarter results. Canadian executives reported declining optimism in four of the five indexes (Sales, Profits, Selling Prices and Inventories) and employment expectations are flat, but the indexes overall in Canada remain at healthy levels.

ENDS

Methodology
In the current International Survey of Business Expectations, Dun & Bradstreet provides a distinctive one-to-one comparison of trends in business expectations worldwide. The D&B index figures represent the net percentage of survey respondents expecting higher sales, profits and prices for the global economy. Each index is calculated by subtracting the percentage of respondents expecting decreases from those expecting an increase. Measured economies include North America, Asia/Pacific and Europe. Unless otherwise noted, the increases and decreases in indexes delineated represent changes from the previous quarter. Dun & Bradstreet has been conducting its international quarterly survey of International Business Expectations since 1988.

For more information please contact:
Adrian Jones, General Manager
Dun & Bradstreet New Zealand
Tel: (09) 359 8000

Dun & Bradstreet New Zealand Ltd, is a member of The Dun & Bradstreet Corporation, the world's leading provider of business-to-business credit, marketing, purchasing, and receivables management and decision-support services. Dun & Bradstreet has the largest database of verifiable data in the world covering more than 57 million public and private companies worldwide. Only Dun & Bradstreet captures over one million business changes in its database every day.

Companies of all sizes in all industries around the world use D&B information in their supply and demand chains. By integrating D&B information into business systems and processes, companies can better manage their customers and suppliers, and achieve a direct and seamless link between back office and front office operations.

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