It went up for the second consecutive quarter, indicating buoyancy in business sentiments, an NCAER release said.

There are four components that make up the BCI: whether overall economic conditions will improve in next six months; whether financial position of firms will improve in next six months; present investment climate; and whether present capacity utilisation was close to or above optimal level.

Since the last quarter, there was all-round improvement in sentiments of all four of them and that drove the buoyancy in BCI.

The share of firms expecting overall economic conditions to improve in next six months went up from 65.8 per cent in Q4 FY24 to 71.2 per cent in Q1 FY25.

Similarly, the share of firms expecting their own financial position to improve in next six months went up from 60.6 per cent in Q4 FY24 to 67.4 per cent in Q1 FY25.

The share of firms perceiving that present investment climate is positive went up from 52.2 per cent in Q4 FY24 to 60.4 per cent in Q1 FY25.

Present capacity utilisation was close to or above optimal level for 97.8 per cent of firms in Q1 FY25. The figure was 95.2 per cent in Q4 FY24.

Compared to Q4 FY24, a larger share of firms in Q1 FY25 expected production and domestic sales to rise in the next six months. Sentiments about new orders also remained buoyant.

Sentiments about external trade, both exports of final products and imports of raw materials have improved with a larger share of firms expecting them to increase in Q1 FY25 compared to Q4 FY24.

Similarly, a higher percentage (71.1 per cent) of firms expected pre-tax profits to rise in Q1 FY25 compared to Q4 FY24 (66.1 per cent).

However, a lower percentage (32.4 per cent) of firms expected that ex-factory price will rise in Q1 FY25 compared to Q4 FY24 (37.7 per cent).

Majority of firms continue to expect the prospects of employment in the next six months of both skilled and unskilled or casual and permanent workers to remain the same as in the past three months. Labour markets’ sentiments show improvement since last quarter.

Nearly half of the respondents expect wage rates for both managerial staff and skilled and unskilled workers to increase over the next six months. The corresponding numbers in Q4 FY24 were relatively higher at around 58 per cent for both managerial/skilled workers and unskilled workers.

In the current round, 50 per cent of firms expect no change in wage rates for both types of workers. This means cost sentiments of labour markets will remain relatively muted.

In case of raw materials, 51 per cent of firms responded that per unit costs of raw materials will remain unchanged. This had remained unchanged since the last quarter, when 52 per cent of firms had perceived that unit costs of raw materials will increase.

Fibre2Fashion News Desk (DS)