The State Bank of Pakistan’s (SBP) latest Business Confidence Survey reveals a slight decrease in overall confidence across various sectors in March 2024. The Business Confidence Index (BCI) fell by 1.0 points to 51.7, with both the Industry and Services sectors contributing to the decline.
Current Business Conditions Weaken
The survey highlights a weakening in current business conditions as measured by the Current Business Confidence Index (CBCI). The CBCI dropped 1.3 points to 47.7, indicating a more cautious outlook among businesses. This sentiment is shared across both the Industry and Services sectors.
Negative Views on Business Climate Increase
The survey also reveals a shift in business sentiment towards a less optimistic view. The percentage of positive responses (positive and very positive) regarding current business conditions decreased by 3.4%, while negative views (negative and very negative) increased by 3.5%.
Future Expectations Remain Positive, But Downtrend Noted
Despite the decline in current confidence, businesses remain somewhat optimistic about the future. The Expected Business Confidence Index (EBCI) dipped slightly by 0.8 points to 55.7. However, similar to current conditions, both the Industry and Services sectors showed a decrease in positive views, with a corresponding increase in neutral and negative outlooks.
Purchasing Managers’ Index Shows Mixed Signals
The Purchasing Managers Index (PMI) provides a mixed picture. While it edged up slightly by 0.1 points to 49.7, it remains below the positive zone (above 50) indicating continued contraction in business activity. However, improvements were observed in three key areas: business activities, total orders booked, and average supplier delivery times.
Inflationary Pressures Mount
Inflation expectations (IE) surged by a significant 4.9 points to 69.4 in March 2024. This rise was driven by both Industry and Services sectors, suggesting growing concerns about future price hikes.
Employment Trends Offer Mixed Signals
The survey offers contrasting trends in employment. The Current Employment Index increased by 2.0 points to 50.9, primarily due to a positive outlook in the Services sector. However, the Industry sector witnessed a decline in the Current Employment Index, indicating potential job losses. Looking ahead, both sectors show a slight increase in expected employment.
Manufacturing Capacity Utilization on the Rise
The survey highlights a positive development in the manufacturing sector within the Industry segment. The Average Current Capacity Utilization (ACCU) rose by 2.4% to 67.7%, suggesting an increase in manufacturing activity.
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