Global business confidence worst since 2009

Only 28 percent of 6,100 companies surveyed across the world said they anticipate a rise in business activity in the next year, a five-year low dating back to the start of the financial crisis.

The last time business confidence was measured in June, it was a more upbeat 39 percent.

"Clouds are gathering over the global economic outlook, presenting the darkest picture seen since the global financial crisis," Chris Williamson, chief economist at Markit wrote in a report published Monday.

Optimism sharply fell in the worlds’ major economies in October; six years after the world received its first dose of financial panic when the UK began to bail out the countries’ banks and Iceland’s three largest banks collapsed.

Pessimism ran high in the flagging eurozone, which may be poised to enter recession again as the biggest economies of Germany and France don’t see major expansion in the coming year. France has the lowest confidence level of all major European countries, with many companies already planning to cut staff in the next year.

Geo-political risks from the crises in the Middle East and Ukraine, and the possibility of the US and UK increasing interest rates, and the general economic peril of the eurozone all weighed heavily on companies.

"A key factor that has held back economic growth in recent years has been the disappointing performance of major emerging market economies, and this looks set to continue, and perhaps even intensify, over the coming year," Williamson said, also warning that business optimism in the BRICS countries had also sunk to a financial crisis low.

Some countries are more upbeat about the future than others. British businesses, for example, scored a 55 percent confidence rating, as firms plan on increasing staffing and capital expenditures. Another bright spot was Spain, which beat the eurozone and global average. China was one of the few countries to see its confidence increase from the last survey.

Markit Global BusinessOutlook Index October 2014

Country

% of Companies that Expect Higher Business Activity in the Next 12 Months
UK 55% Spain 49% Italy 37% India 34.6% US 31% China 27% Germany 24% France 13% Japan 13% Russia 10%

Source: Markit Economics

The view is most gloomy in Russia, which hit a new survey low as sanctions, high inflation, and geopolitical tensions all threaten the business climate.

Optimism in 650 US corporations disappointed over the uncertainty of future domestic policies and the increasingly competitive job market.

"US growth therefore looks likely to have peaked over the summer months, with a slowing trend signaled for coming months," Williamson wrote.

“This survey is a timely reminder that the US economy has not been immune from weakening global business conditions, with euro area woes and heightened geopolitical risk weighing on firms’ business outlook and job hiring intentions for 2015,” Tim Moore, a Senior Economist at Markit, wrote in the note.

The Markit Global Business Outlook Survey polls businesses in 12 countries in order to compile a business sentiment barometer, and has been conducted three times a year over the last five years.