In October, the Business Confidence Index (BCI) experienced a substantial rise of 7.2 points, reaching 46.4. This marks the highest BCI value since April 2022, when it stood at 55.2. The State Bank of Pakistan (SBP), in collaboration with the Institute of Business Administration (IBA), conducted the 41st wave of the Business Confidence Survey (BCS), where both the Industry and Services sectors contributed to this notable increase, with improvements of 7.7 and 7.0 points, respectively.

The Overall Business Confidence Index comprises two key sub-indices: the Current Business Confidence Index (CBCI) and the Expected Business Confidence Index (EBCI).

In terms of the Current Business Confidence Index (CBCI), which reflects the economic conditions experienced over the past six months, it saw a boost of 5.4 points, reaching 41.1 in October 2023. The industry sector was the primary driver of this increase, rising by 6.7 points to 41.2, while the Services sector’s CBCI increased by 5.0 points to 41.1.

Looking ahead, the Expected Business Confidence Index (EBCI) displayed significant improvement in expectations for economic and business conditions over the next six months. EBCI surged by 8.9 points, reaching 51.7 in the current wave. Both the Industry and Services sectors contributed to this positive change, with increases of 8.7 and 8.9 points, respectively. Notably, the disaggregation of responses showed an increase in positive and neutral views, coupled with a decrease in negative views.

The Purchasing Managers Index (PMI) showed a slight decline of 0.3 points, reaching 47.4 in October 2023. It is worth noting that PMI last entered the positive zone in June 2022. This decrease was primarily due to deteriorating indices in three out of its five components during October 2023.

Regarding inflation expectations, the survey reported a significant decrease of 14.6 points, marking the highest decline in inflation expectations. In October 2023, the Inflation Expectations (IE) reached 63.6, the lowest level since December 2020. Both the Industry and Services sectors contributed to the decrease in overall IE, with the Industry sector experiencing a decrease of 15.4 points and the Services sector seeing a decrease of 13.4 points.

Furthermore, the survey highlighted an increase in the Current Employment Diffusion Index, which rose by 1.1 points to 46.6 in the current wave, attributed to growth in both the Industry and Services sectors. The Industry sector saw a notable increase of 3.6 points in October 2023, while the Services sector’s Current Employment Index marginally increased by 0.2 points, reaching 46.4.

Lastly, the survey revealed that the Average Current Capacity Utilization (ACCU) of the manufacturing sector within the Industry sector increased by 10.1% to 69.7% in October 2023. These findings collectively indicate shifts and trends in business confidence, economic conditions, and expectations that will impact various sectors in the coming months.

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