ISLAMABAD - The overall business confidence index for industry and services increased during February 2019 compared to December 2018, according to latest report of State Bank of Pakistan (SBP) on Business Confidence Survey (BCS) conducted by Institute of Business Administration (IBA). This positive perception of businesses is slightly more pronounced for industry but can be witnessed for both industry and services sectors of the economy, it said. “In case of industry, the overall business confidence index has increased from 47 in December 2018 to 53 in February 2019; while that for services increased from 49 to 52 in the same period,” the report said. According to the report, the overall business confidence in February 2019 improved to green zone, which shows predominance of optimistic views of business community about the economy.

“Our headline ‘Overall Business Confidence’ is composed of two sub-indices of ‘Current Business Confidence’ and “Expected Business Confidence. The perceptions of respondents regarding both current and expected economic and business conditions have changed between the last two waves,” it added.

Reporting about the Current Business Confidence, the report says that although the current business confidence index was still below 50, i.e. in red zone, it has improved for both the industry and services sectors. For industry, it has improved from a level of 43 in December 2018 to 46 in February 2019. Similarly, for the services sector it has changed from 42 to 46. For both the sectors regarding the current business conditions views remained pessimistic but with relatively lower intensity in the latest BCS wave.

Turning to ‘Expected Business Confidence’, the report identifies that there was a clear and pronounced increase in confidence in industry and services sectors. The expected business confidence which was already in positive territory with a value greater than 50 increased further in February 2019 to 59.

The increase in optimistic views is more prominent for the firms in industry (51 to 60). In line with the case of current business confidence index, detailed analysis of expected business confidence results reveals similar movement from the shares of negative and very negative views to positive views from the last wave to the current wave of BCS conducted in February 2019  The report also indicated that the current employment diffusion indices have turned positive for services and overall both sector firms, while for industry, it remained the same.

However, the outlook for expected employment is improved; it has significantly improved for both industry and services sector firms between December 2018 and February 2019.

However, it said the Purchasing Managers Index (PMI) has decreased marginally in February 2019 to 51 from the previous level of 52, adding this decrease was mainly caused by decline in business activities over the past six months reported by surveyed firms.

However, it is still in the green zone reflecting slight positive views of business activity of responding firms over the last six months.