All the six factors taken into account under the index - sales volume, net profit, sale price, new orders, inventory levels and employee levels - have declined compared with the previous quarter.

D&B said that optimism was particularly low among respondents in the consumer durables sector and the basic goods sector compared with other sectors.

Demand is expected to be subdued during the second quarter. While about 71 per cent of the respondents expected sales volume to improve during the third quarter, about 58 per cent expected an increase in profits during the same period.

The index for sales volumes stood at 58 per cent, the lowest since the third quarter of 2002.

Around 74 per cent of D&B's respondents expected their orderbook position to improve, placing the resultant optimism index for new orders at 64 per cent, marginally lower compared with the previous quarter.