Business Confidence Index falls to 48.6 in July 2024

July 29, 2024 (MLN): The overall Business Confidence Index worsened by 7.5 points to 48.6 in July 2024, the latest results of the 50th wave of the Business Confidence Survey (BCS), conducted by the State Bank of Pakistan (SBP) in collaboration with the Institute of Business Administration (IBA), revealed.

The Industry sector BCI decreased by 4.7 points to 48.5, while that of the Services sector decreased by 8.5 points to 48.6.

It may be noted that the BCI entered the negative zone after remaining positive for seven consecutive months.

According to the survey report, the headline index “Overall Business Confidence” is comprised of two sub-indices; “Current Business Confidence Index (CBCI)” and “Expected Business Confidence Index (EBCI)”

Current Business Confidence

The Current Business Confidence Index (CBCI), which is based on the general economic conditions in the country over the past six months, decreased significantly by 7.1 points to 46.5 in July 2024 over the previous wave.

This change is driven by both the Industry and the Services sector.

The CBCI of the Industry sector decreased by 4.1 points to 46.5 while that of the Services sector decreased by 8.2 points to 46.5.

The disaggregation of responses reveals that the positive and the neutral views decreased significantly while a significant increase was recorded in the negative views

Expected Business Confidence

As far as the expectations regarding economic and business conditions in the next six months are concerned, a significant decrease was observed in the Expected Business Confidence Index (EBCI) in July, down by 8 points to 50.6.

Both the Industry and the Services sector contributed to this change.

The EBCI of Industry sector decreased by 5.4 points to 50.5 while that for Services sector decreased by 8.8 points to 50.7 in the current wave.

The disaggregation of responses shows a significant increase in the negative views, while the positive views decreased substantially in the current wave.

Purchasing Managers Index

The Purchasing Managers Index (PMI) decreased by 0.6 points to 50.1 in the current wave from the previous wave

The PMI’s disaggregation shows decrease in the indices of three out of its five components.

The quantity of raw material purchases decreased by 3.1 points followed by total number of employees (by 2.1 points) and total orders booked (by 0.4 points).

On the other hand, the firms’ business activities and average supplier delivery times improved by 1.4 and 1.3 points respectively in July 2024.

Inflation Expectations

Regarding inflation, the survey revealed that Inflation Expectations (IE) increased significantly by 13.6 points to 69.6 in July 2024.

This increase is driven by both the Industry and the Services sector.

The Inflation Expectations of the Industry sector increased by 12.8 points to 69.1 and that of the Services sector increased by 14.8 points to 70.4

Employment

The survey also highlighted a drop in the Current Employment Index by 3.3 points to 49.4 in the current wave.

This decrease was contributed by both the Industry and the Services sectors, which decreased by 2.2 and 3.7 points respectively.

The overall Expected Employment Index decreased by 2.7 points to 53.7 in July 2024.

This change was driven by both the Industry and the Services sector.

The Expected Employment Index for the Industry sector decreased by 1.8 points, while that for Services sector decreased by 2.9 points in July 2024 (

Capacity Utilization

The Average Current Capacity Utilization (ACCU)1 of the Manufacturing sector (within the Industry sector) increased by 1% to 61.7% in July 2024.

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