Most firms less bullish about Q3 growth: Poll

THE threat of a fallout from the euro zone debt crisis has dented the confidence of some local firms, but most remain optimistic going into the third quarter, according to a new survey.

Bosses polled by credit rating firm D&B Singapore were largely positive and expect increases in profits, sales and new orders over the next three months.

D&B said the optimism was mainly down to the strong performance of key sectors here, with construction, services and manufacturing leading the way.

Ms Audrey Chia, a D&B senior director, also singled out the biomedical and electronics sectors as star performers, as the global recovery continues.

'A positive business outlook was observed across the board (for the third quarter) with the overall optimism index for both net profit and employment maintaining in the positive region,' she said.

'Nevertheless, the anxiety from Europe's sovereign debt crisis and the global financial fragility are starting to take their toll on overall business confidence with reported figures appearing less robust than in the previous quarter.'

Although less optimistic, most of the 200 companies polled by D&B still had high hopes for the third quarter.

The survey was to compile the Business Optimism Index (BOI), which compares the net percentages of the respondents' expectations in areas such as sales, profits and hiring activities with those in the previous quarter. A positive reading indicates optimism, a zero reading signals no change, while a negative one means the respondent expects a drop in performance.

'The majority of companies surveyed have indicated continued optimism towards their third-quarter performance for sales volume, net profit, selling price, employment and inventory,' said Ms Chia. 'Although overall sentiment is less bullish than in the second quarter.'

Compared with second-quarter figures, the third-quarter index for net profit dipped from 45 per cent to 26 per cent, sales volume from 41 per cent to 29 per cent, and new orders from 42 per cent to 35 per cent.

The BOI for employment also dipped from 14 per cent to 13 per cent, although it remained in the positive range for the fifth quarter running.

However, selling prices are expected to rise moderately in most sectors, led strongly by the mining, services and construction sectors, said Ms Chia.

The BOI results were also in line with similar studies done in recent months.

Last week, the HSBC Small Business Confidence Monitor revealed that small and medium-sized enterprises here were among the most confident in Asia, with more investing to expand in the first half of this year. The official growth forecast for the year was revised upwards last month from 7 to 9 per cent to 13 to 15 per cent.

With Singapore set for record growth, it came as no surprise that businesses were in a buoyant mood. Mr Alex Lau, managing director of Anacle, one of Singapore's fastest growing technology start-ups, said he was 'extremely positive' about the outlook for the rest of the year. 'Our order books have already surpassed our expectations, but the real question is how much of the recovery is driven by real demand and not government stimulus.'

Source: Straits Times, 29 Jul 2010