World Economy

Global business confidence plunges to post-crisis low

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Worldwide business confidence slumped to a five-year low, with company hiring and investment intentions at or near their weakest levels in the post-global financial crisis era, according to a new survey.

"Clouds are gathering over the global economic outlook, presenting the darkest picture seen since the global financial crisis," said Chris Williamson, chief economist at Markit.

The number of companies expecting their business activity to be higher in a years' time exceeded those expecting a decline by just 28 percent. This was below the net balance of 39 percent recorded in the summer, the Markit Global Business Outlook Survey showed.

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The tri-annual survey, published on Monday, looked at expectations for the year ahead across 6,100 manufacturing and services companies worldwide.

Optimism in manufacturing fell to its lowest since mid-2013 but remained ahead of that seen in services, where confidence about the outlook slumped to the lowest in the survey's five-year history.

Hiring, investment to slow

Global hiring intentions slid to within a whisker of the all-time low seen in June of last year, deteriorating in the U.S., Japan, the U.K., euro zone, Russia and Brazil.

"U.K. firms were the most upbeat about employment plans among major economies, while French firms were the most downbeat, France being the only country where a net drop in employment is indicated for the year ahead," Markit said in the report.

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Investment intentions also collapsed to a new post-crisis low across major economies.

China and India bucked the trend, however, with capital expenditure plans in the two countries improving.

Laundry list of concerns

The survey highlighted a growing list of concerns among companies about the outlook for the year ahead including a worsening global economic climate, the prospect of higher interest rates in countries such as the U.K. and U.S. and geopolitical risk emanating from crises in Ukraine and the Middle East.

"Of greatest concern is the slide in business optimism and expansion plans in the U.S. to the weakest seen over the past five years. U.S. growth therefore looks likely to have peaked over the summer months, with a slowing trend signaled for coming months," Williamson said.

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"There's also little sign of the euro zone's malaise ending any time soon, as companies have become even less optimistic about the outlook," he said.

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Business sentiment in Japan wasn't encouraging either.

"Optimism in Japan continued to lag behind that of the U.S., U.K. and even the euro zone, dropping to a two-year low to suggest companies have become increasingly disillusioned with the potential for 'Abenomics' to boost growth," Williamson said, referring to Prime Minister Shinzo Abe's three-pronged plan to lift the economy out of stagnation.