Optimism on the rise for Singapore SMEs; turnover, profit expectations at 3-year high

OPTIMISM seems to be on the rise for small and medium-sized enterprises (SMEs), with expectations of strong sales and profit performance in the next two quarters.

The Singapore Business Federation-DP Info (SBF-DP) SME Index ticked up from 51.2 to 51.8 in its latest poll, signalling an improved outlook for Q2 and Q3 2018.

A score above 50 indicates an expectation of growth, while a score below 50 signals a possible contraction.

According to the index, SMEs expect the next two quarters to deliver their strongest sales and profit results in three years.

All six industries expect their turnover to rise during the next six months, lifting the turnover expectations score to 5.38 (on a scale of one to 10) - the highest score since the third quarter of 2015.

As a result, the profitability expectations score rose to 5.28, with every sector anticipating an improvement in their bottom line. This is the best profitability expectations score since the second quarter of 2015.

Among the six industries, all of them recorded overall index scores of above 50.0, indicating a positive view of the coming six months.

Business Services continues to be the most optimistic with an overall index score of 52.1. This is closely followed by the Commerce/Trading sector with a score of 52.0, and the Transport/Storage Sector with a score of 51.9.

The other three sectors include Construction/Engineering, Manufacturing, and Retail/F&B.

Ho Meng Kit, CEO of SBF, commented: "It is good to see that the sentiment of our smaller companies continue to improve broadly. The positive sentiments of the latest SME Index will be reinforced by a facilitative set of Budget 2018 measures announced in February to foster a more vibrant and innovative economy."

However, he noted on possible headwinds that may be present. "Notwithstanding the optimism amongst our SMEs and a supportive domestic policy environment, we are mindful that recent trade disputes between US and China could affect our growth path," he added.

The index is based on a survey of more than 3,600 SMEs during January and February 2018.