Overview

FORECAST OF BUSINESS PERFORMANCE FOR THE SECOND QUARTER 2026

Businesses are anticipating a softer outlook in the second quarter of 2026, with the Confidence Indicator easing to -1.8 per cent from +4.0 per cent in the previous quarter  (Exhibit I).

Construction sector turns pessimistic with the confidence indicator registered -9.5 per cent in the second quarter of 2026 as compared to +1.4 per cent in the previous quarter. The confidence indicator for Wholesale & Retail Trade sector declines to -7.5 per cent in the reference quarter. Besides that, Industry sector also predicts discouraging performance with a confidence indicator of -3.7 per cent as against +3.3 per cent recorded in the first quarter of 2026. Where as, Services sector expects their business performance remains optimistic with a confidence indicator of +6.2 per cent as compared to +6.6 per cent in the previous quarter (Exhibit II).

Business expectations vary across states, reflecting differing economic outlooks. Positive confidence indicators are recorded in Johor (+1.2%), Kedah (+3.2%), Kelantan (+3.8%), Negeri Sembilan (+1.9%), Perak (+0.9%), Selangor (+0.2%) and Terengganu (+5.5%). In contrast, several states exhibit weaker sentiment, including Melaka (-9.1%), Pahang (-7.1%), Pulau Pinang (-5.2%), Perlis (-7.1%), Sabah (-7.6%), Sarawak (-5.9%), W.P. Kuala Lumpur (-2.8%), W.P. Labuan (-9.5%) and W.P. Putrajaya (-2.3%) (Exhibit III).

The Net Balance at the state level shows that the majority of states recorded improvement, although several states continued to move in the opposite direction. Positive Net Balance was recorded in Johor (+3.4%), Kedah (+22.7%), Kelantan (+3.3%), Negeri Sembilan (+6.4%), Pahang (+3.3%), Pulau Pinang (+3.8%), Perak (+6.2%), Perlis (+13.4%), Selangor (+10.2%), Terengganu (+22.4%), Sabah (+10.2%), Sarawak (+2.3%), W.P. Kuala Lumpur (+9.7%) and W.P. Putrajaya (+3.4%). Meanwhile, Melaka (-5.0%) and W.P. Labuan (-9.2%) registered negative readings, indicating uneven confidence growth across states, with some continuing to face pressures despite the overall positive trend (Exhibit IV).

EXPECTATIONS OF GROSS REVENUE AND NUMBER OF EMPLOYEES

A total of 33.0 per cent of respondents expect their gross revenue to rise in the second quarter of 2026, while 24.0 per cent expect it to drop, resulting in a net balance of +9.0 per cent. Also, 43.0 per cent of respondents predict a standstill in their gross revenue.

In terms of employment, 75.8 per cent of businesses are expecting to retain their staff throughout the second quarter of 2026. Approximately 14.7 per cent of respondents anticipate to hire more, while 9.5 per cent expect to reduce their personnel, resulting in a net balance of +5.3 per cent for the reference quarter (Exhibit V). 

EXPECTATIONS OF BUSINESS PERFORMANCE IN APRIIL TO SEPTEMBER 2026

Looking at the business sentiment for the period of April to September 2026, businesses remain optimistic, with the net balance easing to +7.9 per cent from +10.8 per cent recorded previously .Industry sector continues to record positive business sentiment, recording a net balance of +13.0 per cent, up from +6.2 per cent previously. Moreover, Services sector anticipates positive business situation in the forthcoming six months with a net balance of +7.5 per cent as against +20.6 per cent recorded for the period of January until June 2026. The positive outlook in both Industry and Services sectors reflect favourable business conditions for the forecast period. Meanwhile, Construction sector foresees decline in businessess reflected by a net balance of -5.4 per cent as compared to +12.0 per cent recorded previously. Concurrently, subdued sentiment is recorded in the Wholesale & Retail Trade sector, with a net balance of -1.0 per cent compared to +6.9 per cent previously (Exhibit VI).

For interviews, press statement and clarification to the media, contact:
Baharudin Mohamad
Public Relation Officer
Email: baharudin[at]dosm.gov.my
Phone: 03 8090 4681

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