Pakistan’s business confidence rises in August amid service sector surge

September 12, 2024 (MLN): The overall Business Confidence Index improved by 2.4 points to 51 in August 2024, the latest results of the 51st 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 primarily driven by the Services sector, although the Industry sector also showed some improvement.

Specifically, the BCI for the Services sector increased by 3.1 points to 51.7, while the Industry sector’s BCI recorded an increase of 0.2 points, reaching 48.7.

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)”.

The respondents’ confidence on account of current as well as expected business conditions increased in August 2024.

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 2.9 points to 49.4 in August 2024 over the previous wave.

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

The CBCI of the Industry sector increased by 0.6 points to 47.1 while that of the Services sector increased by 3.7 points to 50.2.

The disaggregation of responses reveals that the positive and the neutral views increased while the negative views decreased.

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 August, up by 2 points to 52.6.

The Services sector mainly contributed to this change. The EBCI of Services sector increased by 2.6 points to 53.3, while that for Industry sector decreased slightly by 0.1 points to 50.4 in the current wave.

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

Purchasing Managers Index

The Purchasing Managers Index (PMI) remained same at 50.1 in the current wave.

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

The firms’ business activities decreased by 0.8 points followed by quantity of raw material purchases (by 0.5 points) and average supplier delivery times (by 0.2 points).

On the other hand, total number of employees and total orders booked improved by 1.3 and 0.2 points respectively in August 2024.

Inflation Expectations

Regarding inflation, the survey revealed that Inflation Expectations (IE) of businesses decreased by 2.4 points to 67.2 in August 2024.

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

The Inflation Expectations of the Industry sector decreased by 2.0 points to 67.1 and that of the Services sector decreased by 3.1 points to 67.3

Employment

The survey also highlighted a rise in the Current Employment Index by 2 points to 51.4 in the current wave.

This increase was contributed by both the Industry and the Services sectors, which increased by 1.4 and 2.2 points respectively.

The overall Expected Employment Index decreased slightly by 0.1 points to 53.6 in August 2024.

Expected Employment Index for the Industry sector improved by 1.3 points to 51.9 in the current wave, while that for the Services sector decreased by 0.7 points to 54.1.

Capacity Utilization

The Average Current Capacity Utilization (ACCU)1 of the Manufacturing sector (within the Industry sector) increased by 4.2% to 65.9% in August 2024.

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