Businesses see gloom lifting: survey

Manufacturing and services sectors see marked improvement

(Singapore) BUSINESS sentiment for Singapore's manufacturing and services sectors has improved significantly, though the number of pessimistic firms still marginally exceeds the optimistic, official survey results yesterday showed.

On the manufacturing front, the Economic Development Board's (EDB) latest survey found that a weighted 16 per cent of manufacturers predict an improvement, while a weighted 18 per cent expect worse business conditions in the next six months. This yields a negative net weighted balance of 2 per cent, considerably more optimistic than the negative net balance of 33 per cent a quarter ago.

The Department of Statistics said that the net weighted balance of expectations was a negative 3 per cent, with a majority of firms expecting an unchanged business climate in the six months ahead. Again, this was a sharp improvement from the negative net weighted balance of 48 per cent recorded in the previous quarter's survey.

Among manufacturers, those in the electronics cluster, severely hit by the global demand drought, were most optimistic. A net weighted 24 per cent of electronics firms were positive, as they expect higher orders and exports in coming months.

But, the chemicals and transport engineering clusters were far less upbeat. Petroleum and petrochemical segments anticipate squeezed industry margins, not just from weak demand, but also from the start-up of new plants overseas, EDB said.

For the marine and offshore engineering segment, concern over a lack of new orders persists due to uncertain oil prices, credit availability and the shipping industry's downturn. The aerospace industry's outlook remains weak too as the slowdown in aviation has hit demand for maintenance, repair and overhaul activities.

A net weighted 3 per cent of manufacturers expect output to fall in the third quarter, while a net weighted 9 per cent plan to reduce headcount, improving the negative 23 per cent balance figure three months ago.

While services overall now expect an unchanged business climate, the sector's mood remains cautious.

The net weighted balance of expectations was negative for wholesale trade (-3 per cent), retail trade (-11 per cent), transport and storage (-19 per cent), real estate (-18 per cent) and business services (-8 per cent). Hoteliers were most optimistic with a net 31 per cent expecting better business and firms in catering and information and communications had net positive expectations too.

Overall, the services sector expects revenue and employment levels to remain stable in the third quarter - with net weighted balances of minus one per cent and positive 4 per cent respectively. The improvement is stark compared to last quarter's net expectations of minus 36 and minus 15 per cent on operating receipts and employment.

Source: Business Times, 1 Aug 2009