Tuesday, 21 Sep 2021

Singapore services, manufacturing firms stay optimistic on outlook, surveys show

SINGAPORE – The business expectations of Singapore firms in the manufacturing and services sectors remained positive, although manufacturing firms were less upbeat than they were three months ago.

Their sentiments were captured in the latest quarterly surveys released separately by the Economic Development Board (EDB) and the Department of Statistics (SingStat) on Friday (July 30).

A weighted 26 per cent of manufacturers see business conditions improving over the next six months, while a weighted 6 per cent foresee a weaker business outlook, the EDB survey showed.

Thus, a net weighted balance of 20 per cent of manufacturing firms anticipate a favourable business situation from July to December. This compares with 38 per cent of firms in the previous quarter’s poll.

A weighted percentage refers to an aggregate of the responses of manufacturers based on their proportion of the manufacturing sector. The net weighted balance is the difference between the weighted percentages of positive and negative responses.

The electronics cluster was the most optimistic, with a net weighted balance of 40 per cent of firms having a positive business outlook.

Sentiment was largely driven by expectations of continued robust demand for semiconductors and other electronic modules and component segments from the 5G market, cloud services and data centres, said EDB.

A net weighted balance of 21 per cent of firms in the transport engineering cluster anticipate a positive business environment from July to December.

Firms in the aerospace segment expect business conditions to improve, in anticipation of the gradual resumption of regional and domestic flights as more countries step up their vaccination programmes.

The land segment also foresees stronger demand for automotive parts as the global automotive industry continues to recover.

However, a net weighted balance of 24 per cent of firms in the chemicals cluster expect a less favourable business situation until December. Within the cluster, firms in the petrochemicals segment are concerned that product prices and margins will be adversely impacted amid new capacities in the region.

Over in the services sector, a net weighted balance of 11 per cent of firms expect a more favourable business outlook, similar to the previous quarter’s survey by SingStat.

Within the services sector, the wholesale trade, finance and insurance, transportation and storage, as well as information and communications, are among those that expect business conditions to improve in the next six months.

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But the food and beverage (F&B) services and real estate industries expect weaker business conditions ahead.

Firms offering F&B services foresee slower business due to dine-in restrictions and expect that demand may not recover immediately after the end of phase two (heightened alert).

Meanwhile, firms engaged in the rental of retail premises expect downward pressure on rental rates due to weaker demand for such spaces.

The services sector expects an overall increase in hiring activity for the third quarter of this year, with a net weighted balance of 3 per cent of firms indicating as such.

The wholesale trade and finance and insurance industries plan to hire more, in line with their optimistic business outlook, as they expect business conditions to improve with higher global Covid-19 vaccination rates.

But firms in the administrative and support services industry expect lower employment levels due to lower demand for their services.

For the manufacturing sector, a net weighted balance of 8 per cent of firms plan to hire more workers in the next three months.

The electronics and biomedical manufacturing clusters were the most optimistic in their employment outlook.

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