Business Confidence Index reaches highest level since April 2022

January 31, 2024 (MLN): The overall Business Confidence Index improved by 1.5 points to 54.5 in January, the highest level BCI value since April 2022 when it was 55.2.

The latest results of the 44th 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 that this increase is derived from the Services sector, which improved by 2.0 points.

On the other hand, Industry sector confidence decreased slightly by 0.2 points in January 2024.

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, increased by 3.0 points to 51.4 in January 2024 over the previous wave.

The services sector was the major contributor to the increase in CBCI for the current wave, which increased by 3.6 points to 52.5 in the current wave.

On the other hand, the industry sector CBCI increased by 1.3 points to 48.1 in the current wave.

Expected Business Confidence

As far as the expectations regarding economic and business conditions in the next six months are concerned, a slight decline was observed in the Expected Business Confidence Index (EBCI) in January, which fell 0.1 points to 57.5 in the current wave.

The industry sector was the contributor to this change whose EBCI decreased by 1.7 points.

Meanwhile, the Services sector, on the other hand, improved by 0.5 points in the current wave.

The disaggregation of responses shows a decrease in the positive views, while the negative and neutral views increased in the current wave.

Purchasing Managers Index

On the other hand, the Purchasing Managers Index (PMI) increased slightly by 0.3 points to 49.1 in the current wave from the previous wave.

It is pertinent to mention here that PMI was last seen in the positive zone in June 2022.

PMI’s disaggregation shows improvement in indices of four out of its five components in January 2024.

The highest increase of 2.2 points was observed in the firms’ business activities followed by total order booked (0.7) average supplier delivery times (0.5), and total number of employees (0.2).

On the other hand, the quantity of raw material purchases decreased by 2.1 points in the current wave.

Inflation Expectations

Regarding the inflation expectations, the survey revealed that the Inflation Expectations (IE) increased by 1.6 points from the previous wave and reached 59.6 in January 2024.

Both the Industry and the Services sectors contributed to the increase in overall IE.

The industry sector witnessed an increase of 1.9 points and the Services sector inflation expectations increased by 0.9 points in the current wave

Employment

The survey also highlighted an increase in the Current Employment Diffusion Index by 2.3 points to 51 in the current survey wave on account of the increase in the Industry as well as the Services sectors.

The Current Employment Index for the Industry sector increased slightly by 0.2 points in January 2024 from the previous wave.

The services sector’s Current Employment Index increased by 3 points to 51.9 in January 2024 over the previous wave.

Capacity Utilization

Lastly, the survey unveiled that the Average Current Capacity Utilization (ACCU) of the manufacturing sector (within the Industry sector) increased by 4.8% to 72.5% in January 2024 from the previous wave.

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