Saturday, October 31, 2009

Improving mood among business spreads

More expect business conditions to be more favourable in next 6 months: EDB survey

BUSINESS sentiment for both the manufacturing and service sectors has improved further, yesterday's release of findings from official surveys showed.

Among manufacturers, the number of optimistic companies exceeded pessimistic ones, yielding a net weighted balance of 9 per cent who now expect business conditions to be more favourable in the next six months.

It is the most positive that this gauge of business sentiment - derived from a survey of 400 companies by the Economic Development Board - has been since the third quarter of 2007.

Even more bullish were those in the services sector. A net weighted balance of 17 per cent of the 1,400 enterprises surveyed by the Department of Statistics expect better business from this month till next March. This, too, was a marked turnaround from the net negative of 3 per cent recorded in August's survey.

But the majority of businesses remained reserved. Sixty-one per cent of those in services and 65 per cent of manufacturers expect business conditions in the next six months to remain 'the same' as in the period from July to September.

Still, what increased optimism there was, was widespread. Across the service sector, hoteliers and caterers were the most optimistic, followed by the financial services. Banks and finance companies, brokers, fund managers and insurance companies, expect greater business activity in the next half-year, the DOS said.

Retailers and wholesalers, too, expect better business, with festive shopping boosting year-end sales, and sales of industrial machinery equipment and motor vehicles expected to rise too.

Those offering business services - such as recruitment firms and travel agencies - also expect a pick-up, while real estate firms think demand will hold up. Even the least optimistic of the lot - firms providing transport and storage services - foresee a stable business climate ahead.

Services will contribute to the bulk of economic growth in 2010, the Monetary Authority of Singapore said in its macroeconomic review earlier this week.

On the manufacturing side, improved sentiment did permeate most, but not all, clusters. Electronics, still a mainstay of Singapore's manufacturing economy, was the most optimistic - a net weighted balance of 22 per cent of firms expect improved business conditions.

General manufacturing firms were upbeat, too, while the precision engineering and chemical clusters turned positive for the first time since the financial crisis exploded last year. But the chemicals cluster 'remains concerned about excess supply of petrochemicals and petroleum refined products in the region', EDB said.

Less positive among the manufacturers were those in transport engineering. Although the marine and offshore and land transport firms expect orders to rise as oil prices trend up and the global economy recovers, the aerospace firms are not expecting any upswing.

Also, though sentiment is up, output could sink. A net weighted 3 per cent of manufacturers expect output to decline in the fourth quarter from the third, as all clusters other than electronics, precision engineering and general manufacturing, expect to report a fall in production.

For the chemicals sector, this is due to 'maintenance shutdowns, intense competition and seasonal factors', while biomedical manufacturers are forecasting lower output due to a different pharmaceutical mix, EDB said.

Source: Business Times, 31 Oct 2009

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