Brunei business sentiment improves in August, but hiring remains weak

DHAKA: Business sentiment in Brunei Darussalam improved in August, with the headline Business Sentiment Index (BSI) rising to 78.1, driven by stronger energy production, new project awards and increased consumer spending during the school holidays.

However, employment sentiment remained subdued, suggesting businesses were cautious about expanding their workforces despite a positive outlook for investment, according to the Brunei Darussalam Central Bank (BDCB).

The August reading indicated improved business conditions compared with July, based on monthly surveys of around 500 businesses across 11 economic sectors in Brunei’s four districts.

The oil and gas-related sector recorded the strongest sentiment, with an index of 94.0. Construction followed at 64.1, transport and communication at 60.8, and manufacturing at 59.2.

By business size, large enterprises recorded an index of 78.5, followed by medium-sized businesses at 66.1 and micro businesses at 54.6. Small businesses, however, registered 49.5, indicating broadly unchanged sentiment under the revised methodology.

Investment outlook remains strong

Investment sentiment remained positive, with the current investment index standing at 81.0. The one-month-ahead index reached 79.8, while the three-month-ahead reading stood at 81.1.

Businesses anticipated spending on machinery, equipment, vehicles, inventories, construction and refurbishment, as well as information technology and production infrastructure.

The investment outlook suggests that businesses intend to continue upgrading their operational capacity, even as some remain cautious about demand and project-related uncertainties.

Looking ahead, the one-month-ahead business conditions index stood at 56.5, indicating expectations of a modest improvement in September.

Businesses cited uncertainty over project awards, customer demand, competition and operational challenges as factors that could affect their performance.

Employment remains subdued

Despite the positive investment outlook, employment sentiment remained broadly stable. The current employment index stood at 46.6, while the one-month-ahead index was 47.1.

Businesses cited elevated input costs and sufficient existing manpower as reasons for maintaining current staffing levels. Some recruitment was reported in connection with new projects and business expansion.

The readings indicate that stronger investment intentions have yet to translate into broad-based hiring expectations.

Operating costs also increased in August, with the current costs index reaching 61.0. Businesses reported higher spending on materials, utilities, logistics and employee-related expenses.

However, the one-month-ahead costs index stood at 49.9, suggesting that businesses expected operating expenses to remain broadly unchanged in September.

Hotels, restaurants and agriculture face challenges

Sentiment varied considerably across economic sectors. Hotels and restaurants recorded a pessimistic reading of 42.3, while agriculture, forestry, fisheries and livestock registered 34.4.

The health and education sector recorded the lowest reading, at 18.6, reflecting expectations of subdued activity during the school holiday period.

The differences highlight uneven business conditions across Brunei's economy, despite the overall improvement in sentiment.

BDCB said it had revised the BSI methodology to improve the index's sensitivity and interpretability. Under the revised system, readings above 55 indicate expansion or optimism, scores between 45 and 55 represent no significant change, and readings below 45 indicate contraction or pessimism.

Historical data have also been recalculated using the revised methodology to maintain consistency and comparability over time.

The BSI tracks business confidence in current and future conditions, investment, employment and operating costs. It serves as a forward-looking indicator of economic activity in Brunei Darussalam.