Malaysia’s Business Confidence Surges To +5.9% In Q3 2026 As Economic Sentiment Improves
Business confidence in Malaysia made a strong comeback in the third quarter of 2026, with the national business confidence indicator rising to +5.9 percent, according to the latest Business Tendency Statistics released by the Department of Statistics Malaysia (DOSM).
The latest reading marks a significant improvement from the -1.8 percent recorded in Q2 2026, indicating a broad recovery in business sentiment across the country. The improvement was supported by stronger expectations for domestic demand as well as international economic activity.
Major Economic Sectors Return To Positive Territory
All major economic sectors reported positive business outlooks during the third quarter, pointing to a broad-based improvement in operating conditions.
The Industry sector recorded the strongest turnaround, with its confidence indicator climbing to +8.2 percent, compared with -3.7 percent in the previous quarter.
The Construction sector also posted a notable recovery, improving from -9.5 percent in Q2 to +4.1 percent in Q3 2026.
Meanwhile, the Wholesale & Retail Trade sector returned to positive territory at +1.2 percent, reversing its previous reading of -7.5 percent.
The Services sector remained firmly in expansion territory, recording +5.2 percent. Although this was slightly lower than its +6.2 percent reading in Q2, the sector continued to maintain a positive outlook.
Terengganu Leads State-Level Business Sentiment
Business confidence improved across most Malaysian states and federal territories during the quarter.
Terengganu recorded the highest confidence indicator at +10.5 percent, followed by W.P. Kuala Lumpur at +9.5 percent and Negeri Sembilan at +9.4 percent.
Other regions with positive business confidence readings included:
- Pahang: +7.1 percent
- Selangor: +5.8 percent
- Sarawak: +5.8 percent
- Perlis: +5.4 percent
- Kedah: +5.1 percent
- Pulau Pinang: +5.0 percent
- Johor: +4.9 percent
- Sabah: +3.7 percent
- Kelantan: +2.1 percent
- Perak: +1.5 percent
- W.P. Putrajaya: +0.6 percent
Only Melaka (-3.9 percent) and W.P. Labuan (-5.4 percent) registered negative business confidence indicators during the period.
The corresponding Net Balance figures also showed generally positive sentiment. Terengganu recorded the strongest reading at +29.5 percent, followed by W.P. Kuala Lumpur (+26.6 percent), Kedah (+19.6 percent) and Perlis (+19.3 percent).
Melaka and W.P. Labuan remained the weakest performers, with Net Balance readings of -0.5 percent and -4.0 percent, respectively.
Businesses Remain Positive On Revenue And Hiring
The survey also highlighted relatively positive expectations for company revenue and employment levels in the third quarter.
Around 31.9 percent of businesses expected their gross revenue to increase, while 47.4 percent anticipated stable revenue. Another 20.7 percent expected revenue to decline.
This resulted in a net balance of +11.2 percent for gross revenue expectations.
Employment sentiment was similarly positive. A large 78.3 percent of businesses expected to maintain their current workforce, while 13.9 percent planned to increase employee numbers.
Only 7.8 percent of companies anticipated reducing their workforce, producing a net hiring balance of +6.1 percent.
Positive Outlook Extends Into The Next Six Months
Businesses also maintained an optimistic outlook for the remainder of 2026.
The overall six-month Net Balance indicator increased to +12.9 percent, compared with +7.9 percent for the April-to-September 2026 forecast period.
The Construction sector showed the strongest medium-term expectations, recording a projected Net Balance of +23.3 percent over the next six months.
It was followed by the Industry sector at +14.3 percent, the Services sector at +13.1 percent, and Wholesale & Retail Trade at +5.3 percent.
The latest figures suggest that Malaysia’s business community is entering the second half of 2026 with stronger confidence, supported by improving expectations across key industries, employment and revenue performance.
