Business sentiment across Malaysia has turned sharply optimistic for the third quarter of 2026, with the national confidence indicator rising to +5.9 percent. The rebound follows a contractionary reading of -1.8 percent in the second quarter, according to the latest Business Tendency Statistics report published by the Department of Statistics Malaysia (DOSM).
The overall growth signal reflects growing commercial assurance across both domestic market demand and international economic activities.
All key economic sectors registered positive business outlooks for the third quarter, signaling broad-based recovery following a sluggish second quarter.
The Industry sector led the operational recovery, climbing to +8.2 percent from -3.7 percent in the previous quarter.
The Construction sector staged a strong reversal, rising to +4.1 percent compared to -9.5 percent in Q2 2026.
The Wholesale & Retail Trade sector moved back into growth territory at +1.2 percent, up from -7.5 percent previously.
The Services sector sustained its expansionary stance with a confidence indicator of +5.2 percent, maintaining steady performance following its +6.2 percent reading in the prior quarter.
A vast majority of states and federal territories recorded positive business confidence indicators for the reference quarter.
Leading the positive sentiment was Terengganu at +10.5 percent, alongside W.P. Kuala Lumpur at +9.5 percent and Negeri Sembilan at +9.4 percent. Other regions posting solid growth sentiment 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), and W.P. Putrajaya (+0.6 percent).
Only Melaka at -3.9 percent and W.P. Labuan at -5.4 percent recorded negative confidence indicators for the period.
Corresponding Net Balance indicators across states mirrored this expansion, driven by strong positive readings in Terengganu (+29.5 percent), W.P. Kuala Lumpur (+26.6 percent), Kedah (+19.6 percent), and Perlis (+19.3 percent), while Melaka (-0.5 percent) and W.P. Labuan (-4.0 percent) recorded softer overall trajectories.
Businesses expressed confidence regarding top-line financial expectations and staff retention during Q3 2026.
On gross revenue expectations, 31.9 percent of survey respondents anticipate higher top-line performance, while 47.4 percent expect revenue levels to remain stable. With 20.7 percent forecasting a drop, the net balance for revenue expectations stands at +11.2 percent.
On employment plans, 78.3 percent of companies intend to maintain their existing staff headcount. Meanwhile, 13.9 percent of surveyed firms plan to expand their workforce against 7.8 percent anticipating reductions, yielding a net hiring balance of +6.1 percent.
Looking into the second half of 2026, overall business sentiment points toward sustained economic momentum. The six-month net balance indicator rose to +12.9 percent, strengthening from the +7.9 percent level recorded for the April to September 2026 forecast period.
Medium-term optimism is anchored by the Construction sector, which projected a net balance of +23.3 percent over the next six months. The Industry sector expects a net balance of +14.3 percent, followed closely by the Services sector at +13.1 percent and Wholesale & Retail Trade at +5.3 percent, confirming positive multi-sector conditions through the end of 2026.
