Pakistan’s business confidence drops in September

September 26, 2024 (MLN): The overall Business Confidence Index decreased by 1 point to 50 in September 2024, the latest results of the 52nd 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 decrease was driven by both the Industry and the Services sectors.

Specifically, the BCI for the Industry sector decreased by 0.6 points to 48.1 while the Services sector confidence decreased by 1 point to 50.7

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) decreased by 1.6 points to 47.8 in September 2024 compared to the previous wave.

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

The CBCI of the Industry sector decreased by 0.8 points to 46.3 while that of the Services sector decreased by 1.8 points to 48.4.

Expected Business Confidence

As far as the expectations regarding economic and business conditions in the next six months are concerned, a drop of 0.3 points was observed in the Expected Business Confidence Index (EBCI) in September.

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

The EBCI of the industry sector decreased by 0.4 points to 50 in the current wave, while the service sector's confidence decreased by 0.3 points to 53.

The disaggregation of responses shows that the positive and neutral views decreased slightly in the current wave, while the negative views increased in the current wave.

Purchasing Managers Index

The Purchasing Managers Index (PMI) decreased by 0.8 points to 49.3 in the current wave.

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

The firms’ business activities decreased by 2.9 points followed by total orders booked (by 1.4 points), quantity of raw material purchases (by 1.3 points) and total number of employees (by 0.6 points).

On the other hand, average supplier delivery times improved by 2.5 points in September 2024.

Inflation Expectations

Regarding inflation, the survey revealed that Inflation Expectations (IE) of businesses decreased substantially by 6.2 points to 61 in September 2024.

This decrease is driven by both the Industry and the Services sectors.

The Inflation Expectations of the Industry sector decreased by 5 points to 62.1 and that of the Services sector decreased by 8 points to 59.3 (

Employment

The overall Current Employment Index decreased by 1.1 points to 50.3 in the current wave.

This decrease was contributed by both the Industry and the Services sectors, which decreased by 0.7 and 1.2 points respectively.

The overall Expected Employment Index decreased by 1.9 points to 51.7 in September 2024.

Expected Employment Index for the Industry sector decreased by 2 points to 49.9 in the current wave, while that for the Services sector decreased by 1.7 points to 52.4.

Capacity Utilization

The Average Current Capacity Utilization (ACCU) of the Manufacturing sector (within the Industry sector) decreased by 0.3% to 65.6% in September 2024.

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