Mumbai, July 24: Business confidence in the country is riding at a new high. That’s what the Reserve Bank says.

However, Dun & Bradstreet India today released a downbeat business optimism index for the period July-September 2006. It said the composite business optimism index for the third quarter recorded a decline of 12.5 per cent to 155.3 from 177.5 in the previous quarter. On a year-on-year basis, the index recorded a decrease of 11 per cent.

D&B said all six optimism indices ? volume of sales, net profits, selling prices, new orders, inventory levels and employees ? have decreased compared with the previous quarter.

The business community appears reasonably optimistic with respect to demand conditions in the third quarter of 2006. Approximately 84 per cent of the respondents expect sales volumes to increase during the July-September quarter, while about 5 per cent expect a decline in sales. The resultant optimism index for volume of sales stands at 79 per cent compared with 85 per cent in the previous quarter.

The resultant optimism index for net profit stands at 79 per cent, indicating a decrease of 1 percentage point over the previous quarter. About 82 per cent of the respondents expect a rise in profitability, while 3 per cent anticipate a decline in profits during the forthcoming quarter.

Approximately 46 per cent of the respondents anticipate selling prices to go up during the forthcoming quarter, while 6 per cent expect prices to decline. The resultant optimism index for selling prices stands at 40 per cent, which is a decrease of 4 percentage points from the previous quarter.

About 84 per cent of the respondents expect their order book position to improve, while only 3 per cent anticipate a decline in the number of orders. The resultant optimism index for new orders stands at 81 per cent, a decrease of 1 percentage point over the previous quarter.

About 31 per cent of the respondents intend to increase their inventory levels, while about 11 per cent expect to witness a decline in stock levels during the July-September quarter. The resultant optimism index for inventory levels is 20 per cent, a substantial decrease of 31 percentage points over the previous quarter.

Also, about 51 per cent of the respondents anticipate an increase in the size of their staff, while a marginal 1 per cent of the respondents expect a decline in the number of employees. The resultant optimism index for employees stands at 50 per cent compared with 53 per cent in the previous quarter.

“The survey, conducted at a time when the domestic stock market was highly volatile reflects a decline in business confidence,” said Manoj Vaish, president & CEO, Dun and Bradstreet ? India.