ISLAMABAD: The Business Confidence Index (BCI) has dropped significantly, falling by 7.5 points to 48.6 in July 2024, according to the latest findings from the 50th wave of the Business Confidence Survey (BCS). This survey is a joint effort by the State Bank of Pakistan (SBP) and the Institute of Business Administration (IBA).
The decline marks a notable shift, as the BCI has entered negative territory after maintaining a positive outlook for seven consecutive months. The survey revealed that the index for the Industry sector decreased by 4.7 points to 48.5, while the Services sector index fell by 8.5 points to 48.6.
The overall Business Confidence Index is composed of two key components: the Current Business Confidence Index (CBCI) and the Expected Business Confidence Index (EBCI).
The Current Business Confidence Index (CBCI), which reflects the general economic conditions over the past six months, saw a sharp decline of 7.1 points, dropping to 46.5 in July 2024. This downturn is evident across both the Industry and Services sectors. Specifically, the CBCI for the Industry sector decreased by 4.1 points to 46.5, while the Services sector saw a reduction of 8.2 points, also settling at 46.5.
Analysis of responses indicates a notable drop in both positive and neutral opinions, with a marked increase in negative perspectives.
Looking ahead, the Expected Business Confidence Index (EBCI), which gauges expectations for the next six months, fell by 8 points to 50.6 in July. This decline was driven by decreases in both sectors. The Industry sector’s EBCI dropped by 5.4 points to 50.5, and the Services sector’s EBCI fell by 8.8 points to 50.7.
The breakdown of responses shows a significant rise in negative outlooks, while positive expectations have markedly diminished.
The Purchasing Managers Index (PMI) decreased by 0.6 points to 50.1 in the current survey wave. The components of the PMI reflect a decline in three of its five indices. Notably, the quantity of raw material purchases fell by 3.1 points, the number of employees decreased by 2.1 points, and total orders booked dropped by 0.4 points. Conversely, business activity and average supplier delivery times saw improvements, rising by 1.4 and 1.3 points respectively.
Inflation Expectations (IE) have surged by 13.6 points to 69.6 in July 2024. This increase is attributed to both the Industry and Services sectors, with the Industry sector’s inflation expectations rising by 12.8 points to 69.1, and the Services sector’s expectations climbing by 14.8 points to 70.4.
The survey also reported a decline in the Current Employment Index, which fell by 3.3 points to 49.4. Both the Industry and Services sectors contributed to this decrease, with the Industry sector dropping by 2.2 points and the Services sector falling by 3.7 points. The Expected Employment Index also saw a reduction, down by 2.7 points to 53.7, with decreases in both sectors—1.8 points for Industry and 2.9 points for Services.
On a more positive note, the Average Current Capacity Utilization (ACCU) in the Manufacturing sector, a subset of the Industry sector, increased by 1% to 61.7% in July 2024.
