Singapore businesses turn optimistic

Singapore

FIRMS in both the services and manufacturing sectors have turned positive about business prospects for the next six months, official surveys say. But the majority still expect conditions in the next six months to remain unchanged.

Of the more than 400 manufacturers polled by the Economic Development Board (EDB) between March and April, 13 per cent expect the business climate to improve - outnumbering the 8 per cent that expect it to deteriorate. The rest do not expect any change. Things are thus looking up, with a positive net weighted balance - the difference between the proportion of optimistic and pessimistic - of 5 per cent of manufacturers, turning around from negative 3 per cent a quarter earlier.

The swing in sentiment was clearest among electronics manufacturers, for whom production has been weighed down by weak external semiconductor demand in the past few months. In March, semiconductors output sank 21.1 per cent from a year ago, leading to a 5.2 per cent decline in the electronics sector.

But things are looking up. A net weighted 19 per cent of electronics producers expect improvement in the latest EDB survey - compared to the net weighted negative of 6 per cent a quarter ago.

"The data storage, semiconductor and other electronic modules & components segments expect better market demand for the period April - September 2015, compared to the seasonally less active first quarter of 2015," EDB said.

Precision engineering firms are also expecting a seasonal uptick in Q2. They were the second most optimistic cluster this round, with a net weighted 10 per cent of firms reporting brighter prospects.

The transport engineering cluster remained the most pessimistic however, with a net weighted 9 per cent of firms expecting worse business conditions. Even so, this was an improvement over the net weighted of 20 per cent that braced for a worsening of business conditions a quarter ago.

On the services front, 16 per cent of the 1,500 enterprises polled by the Department of Statistics (DoS) say business prospects look better for the six months till September, compared with the previous six months. They outnumbered the 13 per cent foreseeing slower business, resulting in a net weighted 3 per cent of services firms that are optimistic this round compared to a pessimistic 4 per cent a quarter ago.

Prospects look brightest for the financial and insurance services sector, where a net weighted 21 per cent of firms hold an optimistic six-month outlook. "In particular, banks and finance companies expect more demand for their services," said DoS.

At the pessimistic end of the spectrum lay the real estate firms - a net weighted 17 per cent of whom expect business conditions to deteriorate over the next six months.

"Developers continue to cite the series of government measures, including the additional buyer's stamp duty and the total debt servicing ratio framework, as reasons for their negative outlook," DoS said.