The Business Confidence Index (BCI) resurged in the August 2022 wave, though it remained in the red zone. It increased by four points to 46 in August 2022, from 42 in the last wave.
The increase in BCI was contributed by both the services and industry sectors. The services sector’s confidence climbed by five points to 46 in August 2022, while the industry sector index increased by one point to four, according to findings published in the recent Business Confidence Survey (BCS) by the State Bank of Pakistan (SBP).
In August 2021, the BCS stood in the green zone with 61 points.
Purchasing Managers Index
After remaining in the green zone for a period of twelve waves, Purchasing Managers Index (PMI) slipped into the red zone. The PMI declined by six points to 49 in August 2022; the lowest level since October 2020. PMI’s disaggregation shows a slump in the indexes of its four out of five components. Index for firms’ business activities, the total number of employees, quantity of raw material purchase, and total orders booked have decreased in the current wave. However, average supplier delivery times improved in the latest wave.
Inflation Expectations
Overall inflation expectations of the business index considerably dipped by eleven points to 68 in August 2022 (the lowest level since April 2021). This fall in inflation expectations was contributed by both the services and industry sectors. The inflation expectation index of the services sector decreased by 10 points to 66 in the August 2022 wave, whereas the industry sector’s inflation expectations index also squeezed by eleven points to 69 in the same period, down from 80 in the last wave.
Employment
The overall current employment diffusion index marginally improved by one point to 50 in August 2022 over the last wave. The services sector is the main contributor to this increase in the employment perception index. The index for the services sector rose to 50 in August 2022 from 47 in the previous wave. However, the industry sector’s current employment index fell by four points to 50 in the latest wave.
Capacity Utilization
Average Current Capacity Utilization (ACCU) measures the percentage of the total capacity being utilized by the industry sector. ACCU decreased by three percent to 68 percent in August 2022 from 71 percent in the last wave of BCS.
Expected Business Confidence
The Expected Business Confidence Index (EBCI) also resurged in August 2022 and once again landed in the green zone. The EBCI increased significantly by six points, to 51 in August 2022, from 45 in June 2022, attributed to both the industry and services sectors. The disaggregation of the EBCI shows an increase in positive and neutral views, while the negative views (negative and very negative) decreased in the current wave.
SBP has been conducting the Business Confidence Survey in collaboration with the Institute of Business Administration (IBA) since October 2017 at a bi-monthly frequency to obtain the views of senior managers of large companies in the industry and services sector. The survey provides information to SBP regarding the perceptions of company managers about current and expected business conditions and the major factors affecting these conditions. It covers their views on production, hiring of employees, demand for credit, and general economic conditions.