Business confidence in Pakistan improved during June 2026 as firms expressed greater optimism about future economic conditions, according to the latest Business Confidence Survey jointly conducted by the State Bank of Pakistan (SBP) and the Institute of Business Administration (IBA).

The Overall Business Confidence Index (BCI) increased by 1.4 points to 48.2 in June, reflecting a gradual improvement in sentiment across both the industrial and services sectors. The survey was conducted during June and covered 512 businesses nationwide.

Sector-wise, confidence among industrial firms improved by 1.2 points to 46.1, while the Services sector recorded a stronger gain of 1.4 points, pushing its index reading to 48.8.

The survey highlighted a notable improvement in business expectations for the coming months. The Expected Business Confidence Index (EBCI), which measures firms’ outlook for the next six months, rose by 2.9 points to 52.1, indicating that businesses are becoming increasingly optimistic about economic prospects and operating conditions.

However, the Current Business Confidence Index (CBCI), which reflects perceptions of business conditions over the previous six months, edged down slightly by 0.1 points to 44.2, suggesting that businesses remain cautious about current economic conditions despite improved expectations.

The Purchasing Managers Index (PMI) also improved marginally, rising to 50.2 and remaining above the neutral 50-point threshold. While business activity, employment, and order books recorded slight declines, raw material purchases increased, indicating continued production activity and demand for inputs.

The survey also pointed to easing inflationary concerns among businesses. Aggregate inflation expectations declined to 8.4%, while the proportion of firms expecting higher prices fell to 69% from 71% in the previous survey round.

Both major sectors reported lower inflation expectations, with the Industry sector recording a decline from 70.9% to 68.9%, while expectations within the Services sector eased from 71.2% to 69.2%.

Employment sentiment softened slightly during the month, with the Current Employment Index declining to 50.1 from 51.4. However, businesses remained optimistic about future hiring plans, as the Expected Employment Index held steady at 53.2.

Meanwhile, manufacturing activity showed signs of improvement, with average capacity utilization rising to 67.1% from 65.4% in the previous survey. The increase suggests that industrial firms are making greater use of their production facilities amid improving demand conditions.

The latest survey results indicate that while businesses remain cautious about current economic conditions, confidence regarding the future outlook continues to strengthen, supported by easing inflation expectations, improving industrial activity, and expectations of continued macroeconomic stability.