This article first appeared in The Edge Financial Daily, on June 30, 2016.

KUALA LUMPUR: Business optimism for Malaysia has slipped slightly for the third quarter of 2016 (3Q16), according to Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study, which showed the BOI at 4.42 percentage points (ppts) for the quarter, compared with 5.83ppts in 2Q16.

In a statement yesterday, D&B said the quarterly BOI study showed that five of six indicators it checked for eight business sectors — agriculture, construction, financial, manufacturing, mining, services, transportation and wholesale — had displayed signs of sustained downward moderation.

The six indicators are: volume of sales, net profits, selling prices, inventory level, employee count and new orders.

Year-on-year, however, sentiments have improved slightly as the BOI was at 2.62ppts in 3Q15.

“For 3Q16, only one of six indicators [has] made q-o-q (quarter-on-quarter) improvements, compared with three of six indicators in the previous quarter,” it said.

D&B said following a rebound in optimism in 2Q16, the manufacturing sector had emerged as the most optimistic sector, though it displays strong signs of easing with five business indicators moderating downwards for 3Q16.

The transportation sector has also emerged as one of the most upbeat sectors, with four of six indicators in the expansionary zone.

“Meanwhile, the outlook for the services sector continues on the path of strong downward moderation for 3Q16, with two of six business indicators falling into the contractionary zone. The wholesale sector remains the most pessimistic sector with four of six indicators in negative region,” it said.

“We are expecting businesses to move into 3Q16 with the same degree of caution as the previous quarters,” said D&B chief executive officer Audrey Chia.

“Despite the improved fiscal situation and reduced expectations of higher interest rates in both the US and the EU (European Union), the volatile global environment continues to weigh on the outlook for the market environment in the coming quarter. Given Malaysia’s high degree of financial openness, we anticipate the ringgit to remain vulnerable to shifting investor sentiments in 2016,” she added.

The BOI is a measure of business confidence in the economy. Released quarterly, it is based on a business sentiment survey that is designed to capture business expectations by polling 200 business owners and senior executives representing major industry sectors in Malaysia.