Pakistan’s business confidence decline in January

January 28, 2025 (MLN): The overall Business Confidence Index decreased significantly by 0.9 points reaching 55.3 in January 2025, the latest results of the 56st 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.

This increase was driven by both the Industry and the Services sectors.

Specifically, the BCI for the Industry sector remain same to 53.5, while confidence in the Services sector fell by 1.2 points to 55.9.

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)”.

It is worth mentioning here that overall BCI is a weighted average of the Industry and Services sectors with 0.25 and 0.75 weights respectively.

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 by 1.4 points to 52.4 in January 2025 compared to the previous wave.

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

Expected Business Confidence

As far as the expectations regarding economic and business conditions in the next six months are concerned, an increase was observed in the Expected Business Confidence Index (EBCI) in January, down 0.3 points to 58.2.

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

Purchasing Managers Index

The Purchasing Managers Index (PMI) increased by 2 points to 51.5.

Inflation Expectations

Regarding inflation, the survey revealed that Inflation Expectations (IE) of businesses increased by 1.1 points to 58.5 in January 2025.

This increase is entirely attributed to the Industry sector, while the Industry sector increased by 2.5 points to 60.2. The Inflation Expectations of the Services sector decreased by 0.9 points to 56.2.

Employment

The survey also highlighted an up in the Current Employment Index by 0.2 points to 50.6 in the current wave.

This change was driven by the Current Employment Index of the Services sector, which decreased by 0.7 points to 51.2, while the Industry sector’s current employment index increased by 3.3 points to 49.1.

The overall Expected Employment Index decreased by 0.3 points to 54.8 in January 2023.

Expected Employment Index for the Industry sector remained unchanged at 52.8 in the current wave, while that for the Services sector decreased by 0.5 points to 55.4.

Capacity Utilization

The Average Current Capacity Utilization (ACCU) of the Manufacturing sector (within the Industry sector) decreased slightly by 1.5% to 62.3% in November 2024.

The Average Current Capacity Utilization (ACCU) of the Manufacturing sector, a key component of the industry sector, experienced a notable decline of 1.5 percentage points in the current wave, settling at 62.3 percent as of January 2025.

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