October 31, 2023 (MLN): The overall Business Confidence Index rose significantly by 7.2 points to 46.4 in October, the highest level BCI value since April 2022 when it was 55.2.

The latest results of the 41st 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 was contributed by both the Industry and Services sectors, which improved by 7.7 and 7.0 points respectively in October 2023.

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 5.4 points to 41.1 in October 2023 over the previous wave.

The industry sector was the major contributor to the increase in CBCI for the current wave, which increased by 6.7 points to 41.2 in the current wave.

However, the Services sector CBCI increased by 5.0 points to 41.1 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 significant improvement was observed in the Expected Business Confidence Index (EBCI) in October, which rose 8.9 points to 51.7 in the current wave.

Both the industry and services sectors were the contributors to this positive change whose EBCI increased by 8.7 and 8.9 points respectively in the current wave.

The disaggregation of responses showed an increase in the positive and neutral views, while the negative views decreased in the current wave.

Purchasing Managers Index

On the other hand, the Purchasing Managers Index (PMI) slightly decreased by 0.3 points to 47.4 in October 2023.

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

PMI’s disaggregation shows deterioration in indices of three out of its five components in October 2023.

The highest decrease of 5.3 points was observed in the average supplier delivery times followed by firms’ business activities (-0.7) and total orders booked (-0.5).

While the total number of employees and quantity of raw material purchases increased by 3.6 points and 1.2 points respectively in the current wave of the BCS survey.

Inflation Expectations

Regarding the inflation expectations, the survey revealed that the Inflation Expectations (IE) significantly decreased by 14.6 points from previous wave (highest decline in IE).

IE reached to 63.6 in October 2023, the lowest level since December 2020 when it was recorded at 61.6.

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

Industry sector witnessed a decrease of 15.4 points and the Services sector inflation expectations decreased by 13.4 points in the current wave

Employment

The survey also highlighted an increase in the Current Employment Diffusion Index increased by 1.1 points to 46.6 in the current survey wave on account of the increase in the Industry as well as the Services sectors.

The Current Employment Diffusion Index for the Industry sector increased by 3.6 points in October 2023 from the previous wave.

The services sector’s Current Employment Index marginally increased by 0.2 points to 46.4 in October 2023 over the previous wave of BCS.

Capacity Utilization

Lastly, the survey unveiled that the Average Current Capacity Utilization (ACCU) of the manufacturing sector (within the Industry sector) increased by 10.1% to 69.7% in October 2023.

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Posted on: 2023-10-31T10:36:08+05:00