Pakistan’s overall Business Confidence Index (BCI) slipped to 55.1 points in October 2025, reflecting a slight decline of 0.5 points compared to the previous survey period, according to the latest findings of the Business Confidence Survey (BCS) jointly conducted by the State Bank of Pakistan (SBP) and the Institute of Business Administration (IBA).
The decline indicates that business sentiment across key economic sectors has weakened, with both current and expected confidence measures showing mixed movements. While the current business outlook softened, the expectations for the next six months suggested cautious optimism, revealing that businesses remain hopeful despite near-term pressures.
The BCI, a composite measure derived from responses in the industry and services sectors, assigns weights of 0.25 and 0.75 to each segment respectively, highlighting the dominant role of services in shaping overall business sentiment.
In October’s results, the Current Business Confidence Index (CBCI) fell by 0.53 points to 50.86, marking subdued activity across firms during the past six months. Businesses reported a slowdown in production levels, constrained credit availability, and reduced staffing, all of which contributed to the downward trend. The weakening perception of general economic conditions also played a role in dampening confidence.
Despite the decline in current sentiment, the Expected Business Confidence Index (EBCI) showed an improvement, rising 4.2 points to 54.76. This indicates that businesses foresee a modest rebound in the coming months, anticipating stronger demand, increased hiring, and improved production levels. The rise in forward-looking confidence suggests that while challenges persist, firms are beginning to see signs of stabilization in the macroeconomic environment.
Inflation expectations among businesses eased slightly in October. The Inflation Expectations (IE) Index declined by 1.18 points to 68.60, indicating a mild reduction in anticipated price pressures. Respondents reported lower expectations for both overall inflation and input costs, as the expected input price index fell significantly by 5.68 points to 62.32. The moderation in inflation expectations could reflect easing import costs, stable exchange rates, and a more controlled pricing environment.
In terms of employment, the survey revealed a mixed trend. The Current Employment Index dropped by 0.88 points to 53.21, suggesting that firms have reduced their workforce or slowed hiring in recent months. The Expected Employment Index also declined slightly by 0.94 points to 56.44, although it remains in positive territory, hinting that businesses plan moderate hiring in the months ahead as they prepare for a gradual recovery.
Another critical indicator, the Average Current Capacity Utilization (ACCU) in the manufacturing sector, declined by 1.55 percentage points to 64.65%. This drop points to lower industrial activity and weaker production intensity, likely driven by softer demand, inventory adjustments, and tighter financing conditions. Manufacturers have reported challenges in maintaining output levels due to cost pressures and delayed orders, although some stabilization is anticipated as energy and financing conditions improve.
Economists note that while the overall index remains above the neutral threshold of 50, signaling positive but fragile business sentiment, the recent dip underscores ongoing concerns over demand sustainability, financing access, and input cost management. The slight improvement in expectations, however, suggests that businesses are positioning for gradual recovery amid improving macroeconomic indicators such as reduced inflation and a more stable exchange rate outlook.
The SBP–IBA Business Confidence Survey is a key economic indicator providing insight into the private sector’s perception of business conditions, employment, and inflation trends. It serves as an essential tool for policymakers in assessing the momentum of economic recovery and the effectiveness of fiscal and monetary policies.
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