English
Singapore’s manufacturing expectations remain downbeat, services sector moderates: surveys
FOR the third consecutive quarter, Singapore manufacturers remain negative about business conditions in the next six months, while positive sentiment in the services sector has moderated, according to separate quarterly surveys on Tuesday (Jan 31).
A net weighted balance of 25 per cent of manufacturers expect a less favourable business situation from January to June 2023, worsening from the previous quarterly survey, where 20 per cent were pessimistic, according to the latest release from the Economic Development Board (EDB).
For services firms, a net weighted balance of 3 per cent are optimistic, down from 9 per cent previously, found a similar survey by the Department of Statistics (Singstat).
The net weighted balance is the difference between the weighted shares of positive and negative responses, with a positive figure indicating more optimism than pessimism.
Among manufacturers, a weighted 6 per cent expected improved conditions ahead, while 31 per cent expected conditions to worsen.
Most clusters were pessimistic about business conditions in the next six months:
- Electronics (-44 per cent)
- Chemicals (-5 per cent)
- Biomedical manufacturing (-27 per cent)
- Precision engineering (-13 per cent)
- General manufacturing (-25 per cent)
Almost all segments in these clusters were negative, except the petrochemicals segment in chemicals, which was neutral. Higher operating costs and a weaker macroeconomic environment were common concerns among the segments.
The current downcycle in the global semiconductor industry was cited as one reason for the pessimism in electronics, while the recently imposed technology export restrictions by the US, which will likely weigh on orders for semiconductor-related equipment, was raised as a cause for negativity in precision engineering.
Transport engineering was the only cluster to buck the trend, with a net weighted balance of 21 per cent of manufacturers expecting the business outlook to improve in the half year.
The aerospace segment (43 per cent), which expects higher demand for aircraft maintenance, repair and overhaul (MRO) jobs as cross-border air travel continues to recover, leads the optimism, EDB said.
Similarly, the marine and offshore engineering segment (11 per cent) is positive in view of the continued pick-up in global oil and gas activities and more ship-repair jobs as well as offshore conversion projects secured.
Manufacturers in the land segment (-22 per cent) were pessimistic, however.
Similar to the six-month outlook, on production, a majority of the manufacturing clusters are downbeat, with a net weighted 13 per cent expecting lower output in the next three months.
Half the clusters project a lower level of production, namely the electronics (-40 per cent), biomedical manufacturing (-4 per cent) and precision engineering (-2 per cent) clusters. Transport engineering (22 per cent), chemicals (13 per cent) and general manufacturing (1 per cent) project a higher level of production.
In terms of hiring, the majority of firms expect employment level in the first quarter of 2023 to remain similar to the fourth quarter of 2022, EDB said.
Overall, a net weighted balance of 3 per cent of manufacturers expect a decline in hiring activities for the first three months of the year, compared to the previous quarter. In particular, the electronics (-25 per cent) and precision engineering (-6 per cent) clusters are the less optimistic in their employment outlook.
In the services industry, 19 per cent of firms were upbeat about business conditions in the first half of 2023, while 16 per cent foresee deteriorating business conditions.
Most segments were upbeat on the next six months’ business outlook:
- Retail trade (8 per cent)
- Transportation and storage (12 per cent)
- Accommodation (16 per cent)
- Finance and insurance (2 per cent)
- Real estate (2 per cent)
- Professional services (15 per cent)
- Administrative and support services (4 per cent)
- Recreation, community and personal services (12 per cent)
The exceptions were:
- Wholesale trade (-6 per cent)
- Food and beverage services (-10 per cent)
- Information and communication (-4 per cent)
Noting the positivity in the accommodation industries, Singstat said that hoteliers cited the upswing of international travel and increased tourist arrivals in Singapore as reasons for optimism.
The food and beverage services industry is less optimistic about the business prospects for the period of January to June 2023 compared to July to December last year, which coincided with the year-end holiday and the festive season, it added.
With a net weighted balance of 3 per cent of firms, the services sector foresees higher revenue for the January to March period compared with October to December.
On employment, the services sector expects an increase in hiring activity for the period, with a net weighted balance of 5 per cent.
“Hoteliers within the accommodation industry expect to increase headcounts to cope with higher business activity from tourist arrivals in the coming months,” Singstat said. “In line with their positive revenue outlook, firms within the recreation, community and personal services industries also expect to increase hiring.”
Source: https://www.businesstimes.com.sg/singapore/singapores-manufacturing-expectations-remain-downbeat-services-sector-moderates-surveys