Brunei Darussalam Central Bank (BDCB) yesterday published Brunei Darussalam’s Business Sentiment Index (BSI) for the month of October 2022. The index is based on surveys conducted on more than 600 micro, small, medium and large-sized businesses from 11 economic sectors in Brunei Darussalam, across all districts.
The monthly index is designed to measure the level of business confidence/sentiment in the country covering various aspects including current and future business conditions, investments, employment of workers, as well as costs of running the businesses. Therefore, BSI serves as a leading macroeconomic indicator with its forward-looking element.
The BSI and sub-indices can be interpreted as below: Above 50 – expansion/optimism compared to the previous month; 50 – similar/no change compared to the previous month; and below 50 contraction/less optimism compared to the previous month.
There are nine sub-indices within the BSI. The Current Business Conditions sub-index, being the main headline index for the BSI, was 49.9 in October 2022.
In general, private sector businesses were slightly pessimistic towards their business conditions in October 2022 compared to the previous month. This is due to expectations of a slowdown in activities, reduced domestic spending with the borders fully opened, as well as the rainy season which affects operations in some sectors.
Meanwhile, some businesses expected improvement in business performance with increased activities, as well as sales and projects compared to September 2022.
Looking ahead, businesses were generally optimistic of their performance in November 2022 as indicated by the index for one month ahead, which stood at 50.4. This was driven by expectations of more projects and activities in November 2022.
The Investment sub-index was 50.5 for the current month, 50.0 for one month ahead, and 50.2 for three months ahead. This indicates that, in general, businesses expected to increase their investment expenditures in October 2022 and in the next five months.
The increase, among others, may be attributed to system upgrades; purchase of materials for projects; machinery and equipment; company vehicles; renovations and expansion of premises; opening of new outlets/branches; and the stocking up of inventory.
Meanwhile, for the month of November 2022, the level of investment expenditure is expected to remain the same as the previous month.
The Employment sub-index was 50.3 for the current month, and 50.5 for one month ahead.
This indicates that businesses generally expected to hire more employees in October and November 2022, in line with expansion plans and increased number of projects.
Moreover, a number of companies have indicated plans to continue hiring as they were still experiencing shortage of workers due to the difficulty in retaining local employees and bringing in foreign workers.
The Costs sub-index was 50.5 for the current month, and 50.4 for one month ahead.
Companies generally expected the costs of running their businesses to increase in October and November 2022. Several factors were cited such as increased costs of food ingredients and raw materials such as cement and stones; higher shipment costs; maintenance works; project and salary expenses as well as recruitment costs; increased marketing activities; and purchase of flight tickets for outgoing foreign employees.
In terms of economic sectors, four out of 11 sectors recorded optimism in October 2022.
The finance and insurance sector showed the largest increase in sentiment with better performance expected towards the end of the year.