Pakistan’s business confidence surges in October

November 04, 2024 (MLN): The overall Business Confidence Index increased significantly by 4.3 points to 54.3 in October 2024, the latest results of the 53st 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 4.9 points to 53, while the confidence in the Services sector rose by 4 points to 54.7.

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)”.

It is worthy to mention here that overall BCI is weighted average of Industry and Services sector 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 3 points to 50.8 in October 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 2.5 points to 48.8 while that of the Services sector increased by 3.1 points to 51.5

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

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 October, up 5.4 points to 57.7.

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

The EBCI of the Industry sector increased significantly by 7.1 points to 57.1 in the current wave, while the Services sector’s confidence increased by 5.0 points to 58.0.

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) decreased by 0.6 points to 48.7.

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

The total orders booked decreased by 1.9 points followed by total number of employees (by 0.9 points), quantity of raw material purchases (by 0.5 points) and average supplier delivery times (by 0.1 points).

On the other hand, firms’ business activities improved by 0.4 points in October 2024.

Inflation Expectations

Regarding inflation, the survey revealed that Inflation Expectations (IE) of businesses decreased 5.0 points to 56.0 in October 2024.

This decrease is driven by both the Industry and the Services sectors. The Inflation Expectations of the Industry sector decreased by 5.6 points to 56.5 and that of the Services sector decreased by 4 points to 55.3.

Employment

The survey also highlighted a rise in the Current Employment Index by 0.9 points to 51.2 in the current wave.

This change was driven by the Current Employment Index of Services sector which increased by 1.5 points to 52.5, while the Industry sector’s current employment index decreased by 0.9 points to 47.3.

The overall Expected Employment Index increased by 3.7 points to 55.4 in October 2024.

Expected Employment Index for the Industry sector increased by 3 points to 52.9 in the current wave, while that for the Services sector increased by 3.8 points to 56.2

Capacity Utilization

The Average Current Capacity Utilization (ACCU) of the Manufacturing sector (within the Industry sector) increased slightly by 0.3% to 65.9% in October 2024.

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