Singapore manufacturers, services firms slightly more upbeat about outlook for next 6 months

SINGAPORE manufacturers and services firms appear slightly more upbeat about business conditions in the next six months compared to the previous quarter, separate quarterly surveys showed on Friday (Apr 28).

A net weighted balance of 2 per cent of manufacturing firms anticipate a favourable business situation from April to September, according to the latest release from the Singapore Economic Development Board (EDB).

This is the first improvement for the sector after three straight quarters of pessimism. In the previous quarter, a net weighted balance of 25 per cent of manufacturers were expecting a less favourable situation from January to June.

For services firms, a net weighted balance of 4 per cent are optimistic about conditions from April to September, inching up from the previous quarter’s 3 per cent, a similar survey by the Department of Statistics (SingStat) found.

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 12 per cent expected improved conditions for the same period, compared with a weighted 10 per cent who foresee a weaker business outlook.

The transport engineering cluster is the most hopeful, with a net weighted balance of 50 per cent of firms expecting favourable business conditions. This was led by the aerospace segment, which continues to expect higher demand for aircraft maintenance.

Other clusters that were optimistic about business conditions were:

  • Electronics (7 per cent)
  • Chemicals (4 per cent)

Biomedical manufacturing sentiments were flat.

Sentiment in the precision engineering cluster turned a shade worse with a net weighted balance of 25 per cent of firms expecting lacklustre business prospects.

Business expectations among firms in general manufacturing eased slightly, with a net weighted balance of 16 per cent anticipating worse business conditions.

Overall, a net weighted balance of 1 per cent of manufacturers expect higher output in Q2, compared to the previous quarter. All clusters except electronics and chemicals project a higher level of production.

Over three-quarters of firms reported no limiting factors that would affect their ability to obtain export orders in Q2.

A weighted 76 per cent of manufacturers expect employment levels in Q2 to remain similar to the previous quarter. Hiring activities are also expected to remain similar.

A weighted 70 per cent of manufacturers plan to invest in plant and machinery in the next 12 months, up to March 2024. Among them, half expect higher or similar levels of capital expenditure, compared to the past 12 months.

In the services industry, 19 per cent of firms are upbeat about business conditions while 15 per cent were bracing for deteriorating conditions from April to September.

A majority of services firms had an optimistic business outlook:

  • Accommodation (21 per cent)
  • Food and beverage (F&B) services (15 per cent)
  • Finance and insurance (15 per cent)
  • Professional services (15 per cent)
  • Administrative and support services (8 per cent)
  • Recreation, community and personal services (20 per cent)

Sentiments were flat among information and communication firms, while four firms reported a pessimistic outlook:

  • Wholesale trade (-7 per cent)
  • Retail trade (-19 per cent)
  • Transport and storage (-5 per cent)
  • Real estate (-11 per cent)

A net weighted balance of 5 per cent of firms in the services sector foresee higher revenue for the next six months. Over 20 per cent of firms in recreation, community and personal services, F&B services and accommodation are expecting this.

In terms of employment, the majority of industries expect to increase hiring activities in Q2. The exceptions were wholesale trade, retail trade and real estate.