Pakistan’s business confidence surges in November

December 17, 2024 (MLN): The overall Business Confidence Index increased significantly by 1.4 points reaching 55.7 in November 2024, the latest results of the 54st 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 increased by 0.5 points to 53.5, while confidence in the Services sector rose by 1.7 points to 56.4.

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, increased by 2.2 points to 53.0 in November 2024 compared to the previous wave.

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

The CBCI of the Industry sector increased by 2.4 points to 51.2 while that of the Services sector increased by 2.1 points to 53.6.

The disaggregation of responses reveals that the positive views increased while the negative views decreased in the current wave, November 2024.

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 November, up 0.7 points to 58.4.

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

The EBCI of the Industry sector decreased significantly by 1.3 points to 55.8 in the current wave, while the Services sector’s confidence increased by 1.3 points to 59.3.

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

Purchasing Managers Index

The Purchasing Managers Index (PMI) increased by 1.0 points to 49.7.

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

The total orders booked increased by 2.5 points followed by the total number of employees (by 0.2 points), the quantity of raw material purchases (by 1.6 points), and the average supplier delivery times decrease (by 1.0 points).

On the other hand, firms’ business activities improved by 2.5 points in November 2024.

Inflation Expectations

Regarding inflation, the survey revealed that Inflation Expectations (IE) of businesses decreased by 0.7 points to 55.3 in November 2024.

This decrease is entirely attributed to the Services sector, while the Industry sector remained unchanged. The Inflation Expectations of the Services sector decreased by 2 points to 53.3.

Employment

The survey also highlighted a decline in the Current Employment Index by 0.5 points to 50.7 in the current wave.

This change was driven by the Current Employment Index of the Services sector which decreased by 0.7 points to 51.8, while the Industry sector’s current employment index increased by 0.2 points to 47.5.

The overall Expected Employment Index decreased by 0.7 points to 50.7 in November 2024.

Expected Employment Index for the Industry sector decreased by 1.9 points to 51.0 in the current wave, while that for the Services sector increased by 0.2 points to 56.0.

Capacity Utilization

The Average Current Capacity Utilization (ACCU) of the Manufacturing sector (within the Industry sector) decreased slightly by 2.6% to 63.3% 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 2.6 percentage points in the current wave, settling at 63.3 percent as of November 2024.

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