Outlook less grim among services, manufacturing firms in Singapore

SINGAPORE – Companies in Singapore are less pessimistic about business for the next six months, with those in services registering a sharp improvement in outlook with the easing of Covid-19 curbs on travel and gatherings, as well as the prospect of year-end holidays and the festive season.

The latest sentiments were captured in separate surveys released on Friday (Oct 30) by the Department of Statistics (Singstat) and the Economic Development Board (EDB).

Firms in the services sector swung to being less negative in their expectations, with a net weighted balance of 5 per cent of respondents predicting slower business for the six months from October to March next year.

Though the services sector’s overall outlook stayed negative, this was a big step up from the net weighted balance of 31 per cent who saw weaker business prospects in Singstat’s previous quarter’s survey.

For manufacturing, a net weighted balance of 3 per cent of firms predict less favourable business conditions, due to uncertainty in the Covid-19 pandemic, global global economy and United States-China tensions, the EDB survey showed. This level, however was better than the 7 per cent that did so in the previous quarterly survey.

Within the services sector, several industries expect business conditions to improve such as the recreation, community and personal services; food and beverage services; retail trade; and information and communications industries. Conversely, those in accommodation, real estate and business services industries continue to be less optimistic in their outlook.

In terms of jobs, the services sector expects the overall employment level to drop in the fourth quarter of this year.

The F&B services and retail trade industries expect to hire more for the rest of the year, anticipating increased demand from the upcoming year-end holidays and festive season. 

However, firms in the accommodation and transport and storage industries expect to decrease hiring in the fourth quarter. Hotels and air transport firms expect slow pickup in demand for their services due to global travel restrictions that remain.

Among manufacturers, a majority of firms (a weighted 82 per cent) expect the employment level in the fourth quarter to remain similar to the previous quarter. Overall, a net weighted balance of 8 per cent of manufacturers plan to hire fewer workers in the next three months. All manufacturing clusters, except the electronics and biomedical manufacturing, project a smaller workforce for the fourth quarter.

The sector’s positive sentiment is largely led by the miscellaneous industries segment, which expects higher demand for construction-related materials such as ready-mixed concrete and steel structural products, as more local construction activities slowly restarted.

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A net weighted balance of 9 per cent of firms in biomedical manufacturing anticipate an improved operating environment in the next six months. This is led by the medical technology segment which expects export orders to increase following the reopening of markets.

In the transport engineering cluster, a net weighted balance of 4 per cent of firms expect better business prospects. The land segment anticipates higher export demand for automotive parts, while marine and offshore engineering expect cite more foreign workers living in dormitories returning to work, even as the global oil and gas market remains in the doldrums.

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In electronics, 16 per cent of firms expect less favourable business prospects. Within the cluster, semiconductor firms anticipate seasonally weaker chip demand in the next six months, and express caution over elevated risks such as Covid-19 and US-China tensions. In contrast, the other electronic modules and components segment expects more orders from the 5G market in the months ahead.

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