Global business sentiment slides to two-year low

There was a dip in confidence among companies towards the end of 2024, according to the S&P Global Business Outlook Survey which evaluated responses from a panel of 12,000 companies between October 09-29. Projections for growth in output and employment were at two year lows, while investment intentions also moderated. Meanwhile, inflation expectations were little-changed from the June outlook survey.

At +24%, the net balance of companies worldwide predicting a rise in business activity over the coming year in October was down from +28% in June and the lowest in two years. The drop in confidence in part reflected uncertainty in the lead-up to the US Presidential Election but was also attributed to economic growth worries, notably in the Eurozone.

Waning confidence in developed markets contrasted with improved optimism in emerging economies, with stronger sentiment seen in mainland China, India and Brazil.

The overall drop in sentiment was centred on the service sector, where the respective net balance decreased to +25%. Meanwhile, expectations were unchanged from the summer in manufacturing (+22%).

Positively, net sentiment around interest rates was neutral in October, after having been negative in each survey since June 2021, while firms were at their least downbeat regarding supply chains and inflation since late-2020 and early-2021 respectively.

In line with the picture for business activity, global business sentiment around employment also had a two-year low in October. The net balance of firms expecting to raise employment, less those expecting a decline, dropped to +9% from +11% in June. Hiring intentions were below the series average as a result. The Eurozone is set to see barely any growth of employment over the coming year, with German firms standing out in predicting a fall in workforce numbers, but more resilient hiring intentions by long-run standards were seen in the US, Japan and the UK, albeit moderating in all cases since the summer.

Business investment plans were muted in the final quarter of 2024, and broadly in line with the picture over the past year-and-a-half, running especially low in the Eurozone and mainland China.

There was little change in inflation expectations globally. The net balance for non-staff input costs ticked up to +25% in October from +24% in June, while the readings for staff costs and output prices were unchanged at +36% and +22%, respectively.

Cost pressures are set to remain marked in the Eurozone, with the US, Japan, Brazil and Russia also posting expectations above the global average. Mainland China signalled the lowest expectations for both non-staff and staff costs of all the countries for which comparable data are available.

Mainland China also recorded the weakest output prices net balance, with just +9% of companies predicting a rise over the coming year. At the other end of the scale, expectations were particularly high in Russia (+54%), followed by the UK (+42%) and Brazil (+40%).

There was little difference between manufacturing and services when it came to inflation expectations for non-staff input prices, staff costs or output charges.

At +11% in October, the net balance for profitability was unchanged from that posted in the previous outlook survey, remaining comfortably below the series average of +19%. Service providers were slightly more confident regarding profits than their manufacturing counterparts.

Companies in the Eurozone were downbeat regarding profitability for the eighth outlook survey running (net balance -2%), with negativity centred on Germany and France. In contrast, Indian companies were at their most optimistic since the February 2015 survey (+30%).

 

No surprises in US inflation print for October

The US Consumer Price Index (CPI) inflation print increased 0.2% on a seasonally adjusted basis in October, the same increase as in each of the previous three months, the US Bureau of Labor Statistics has reported.

The index for shelter rose 0.4% in October, accounting for over half of the monthly increase. The food index also increased over the month, rising 0.2%, while the food at home index increased by 0.1% and the food away from home index rose by 0.2%. The energy index was unchanged over the month, after declining 1.9% in September.

The index for all items less food and energy rose 0.3% in October, as it did in August and September. Indexes that increased in October include shelter, used cars and trucks, airline fares, medical care, and recreation. The indexes for apparel, communication, and household furnishings and operations were among those that decreased over the month.

The annual all-items index rose 2.6% for the 12 months ending October after rising 2.4% over the 12 months ending September. The all items less food and energy index rose 3.3% over the last 12 months. The energy index decreased 4.9% for the 12 months ending October, while the food index increased 2.1% over the last year.

“Overall, this inflation print is unlikely to derail the Fed’s rate-cutting cycle and we continue to expect the Fed to cut rates by 25 basis points at their final 2024 meeting next month,” commented Nathaniel Casey, Investment Strategist at wealth management firm Evelyn Partners. “However, we remain vigilant of any further deviations in the inflation trajectory, given the resilience of the US economy and the potentially expansive fiscal policy that could accompany the Trump Presidency in January.”

 

New rules aim to strengthen resilience of UK’s financial sector

Financial firms and financial market infrastructures (FMIs), such as payment systems, have become increasingly reliant on the services of a small number of third-party providers, known as critical third parties. While these third parties can enhance competitiveness for the sector, disruption or failure to one of them - such as a cyber-attack or power outage - could affect a large number of consumers and firms and threaten the stability of the UK financial system. 

That is why, in 2023, the UK government gave regulators new powers to oversee the resilience of the services these third parties provide the sector, which may cause risks to financial stability. Now, the Financial Conduct Authority (FCA), Bank of England and Prudential Regulation Authority have set out how they intend to use their new powers, having consulted and working closely with industry to inform the design of the regime. The new rules align closely with international standards and similar regimes, like the EU’s Digital Operational Resilience Act. 

The final rules, when implemented, are designed to not only strengthen the resilience of the services that critical third parties provide to individual firms, but improve the resilience of the UK financial services sector as a whole. The FCA said in a statement that strengthening resilience and promoting market stability will ensure the UK is an attractive place to do business. 

The new rules do not reduce the responsibility of financial firms and FMIs in making sure they are resilient to operational shocks and for their management of third-parties, in-line with our existing outsourcing and operational resilience rules.

The government will decide which third parties should fall under the new regime based on advice from regulators. The regulators say they welcome engagement from industry over the coming months as the regime is implemented.  

 

FIS and Oracle collaborate on utilities’ billing and payments capabilities 

FIS has announced a collaboration with Oracle to enhance billing and payment capabilities for Oracle’s utility customers. The FIS BillerIQ solution running on OCI will enable the rollout of electronic bill delivery and provide an end-to-end experience from meter consumption to payment. This collaboration aims to enable money to flow efficiently and securely while in motion, offering customers the flexibility and assurance they need in managing their utility bills. Oracle manages billions of utility customer bills annually.

Despite their high costs and inefficiencies, 75% of organisations still use paper cheques for bill payments. With BillerIQ running on OCI, customers can gain an intuitive bill delivery and payment solution that makes accepting digital payments simple and secure. This suite helps meet the diverse financial needs of utility customers across industries like electricity, gas, and water. Offering multiple payment options, including ACH, credit, debit, Realtime Pay, and digital wallets, BillerIQ enables seamless payment experiences. This should give end consumers the flexibility to manage their utility bills with features tailored to their financial needs.

“The utility sector has historically used traditional payment methods,” said Seamus Smith, group president of Global Automated Finance, FIS. “However, with smart meters and digital payment technologies like mobile banking and e-wallets, consumers now expect to pay bills digitally. The inefficiencies and fraud risk of paper cheques add to the challenges faced by the utility industry.”

 

Maybank Singapore partners with PracBiz on supply chain finance

Maybank Singapore and PracBiz have formed a strategic partnership to address key liquidity and financial process challenges within the supply chain ecosystem. By integrating Maybank’s supply chain financing solutions with the PracBiz Exchange (PBX) platform, the collaboration aims to strengthen cash flow management for businesses across the fast-moving consumer goods (FMCG) sector and its extended supply networks.

Businesses are increasingly seeking digital solutions to reduce reliance on traditional, paper-based financial processes. PBX, managed by PracBiz, serves as a digital infrastructure, processing over $5bn in transactions annually across sectors such as food and beverage, FMCG, and pharmaceuticals. The platform is designed to enable efficient procurement and invoicing, streamlining B2B transactions to foster resilience and flexibility.

The collaboration underlines how digital finance solutions can unlock greater liquidity, sustainability, and efficiency in supply chain operations. As businesses prioritise digital transformation, partnerships like this can help supply chains meet evolving demands while maintaining financial stability.