Overview

FORECAST OF BUSINESS PERFORMANCE FOR THE THIRD QUARTER 2026

Businesses foresee an improving business situation for the third quarter 2026 with positive confidence indicator of 5.9 per cent as compared to -1.8 per cent in the second quarter 2026 (Exhibit I).

Industry sector turns optimistic with the confidence indicator registering +8.2 per cent in the third quarter of 2026 as compared to -3.7 per cent in the previous quarter. The confidence indicator for Construction sector climbs to +4.1 per cent in the reference quarter (Q2 2026: -9.5%). Besides, Wholesale & Retail Trade sector also predicts encouraging performance with a confidence indicator of +1.2 per cent as against -7.5 per cent recorded in the second quarter of 2026. Whereas, Services sector expects their business performance to remain optimistic with a confidence indicator of +5.2 per cent as compared to +6.2 per cent in the previous quarter (Exhibit II).

The confidence indicator at the state level showed varied levels of business confidence, with most states recording positive readings, namely Johor (+4.9%), Kedah (+5.1%), Kelantan (+2.1%), Negeri Sembilan (+9.4%), Pahang (+7.1%), Pulau Pinang (+5.0%), Perak (+1.5%), Perlis (+5.4%), Selangor (+5.8%), Terengganu (+10.5%), Sabah (+3.7%), Sarawak (+5.8%), W.P. Kuala Lumpur (+9.5%) and W.P. Putrajaya (+0.6%). Meanwhile, Melaka (-3.9%) and W.P. Labuan (-5.4%) recorded pessimistic confidence indicators (Exhibit III).

The Net Balance at the state level indicates that most states recorded improvement, with only a few states showing a less favourable movement. Positive Net Balance was recorded in Johor (+10.1%), Kedah (+19.6%), Kelantan (+9.3%), Negeri Sembilan (+8.8%), Pahang (+17.7%), Pulau Pinang (+8.9%), Perak (+4.6%), Perlis (+19.3%), Selangor (+13.3%), Terengganu (+29.5%), Sabah (+11.4%), Sarawak (+4.5%), W.P. Kuala Lumpur (+26.6%) and W.P. Putrajaya (+3.1%). Meanwhile, Melaka (-0.5%) and W.P. Labuan (-4.0%) recorded weaker readings, reflecting variations in business expectations across states (Exhibit IV).

EXPECTATIONS OF GROSS REVENUE AND NUMBER OF EMPLOYEES

A total of 31.9 per cent of respondents expect their gross revenue to rise in the third quarter of 2026, while 20.7 per cent expect it to drop, resulting in a net balance of +11.2 per cent. Also, 47.4 per cent of respondents predict a standstill in their gross revenue.

In terms of employment, 78.3 per cent of businesses are expecting to retain their staff throughout the third quarter of 2026. Approximately 13.9 per cent of respondents anticipate to hire more, while 7.8 per cent expect to reduce their personnel, resulting in a net balance of +6.1 per cent for the reference quarter (Exhibit V). 

EXPECTATIONS OF BUSINESS PERFORMANCE IN JULY TO DECEMBER 2026

Looking at the business sentiment for the second half of 2026, businesses remain optimistic, with the net balance rising to +12.9 per cent from +7.9 per cent recorded for the period of April to September 2026. The positive outlook across all sectors indicates favourable business conditions in the forecast period. Construction sector anticipates a favourable business situation over the forthcoming six months, with a net balance of +23.3 per cent, compared with -5.4 per cent recorded in the reference period. Industry sector foresees positive business conditions, with a net balance of +14.3 per cent. Sentiment in Services sector also shows optimism, with a net balance of +13.1 per cent. Similarly, Wholesale & Retail Trade sector expects an improved business situation, with a net balance of +5.3 per cent (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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