SINGAPORE businesses are slightly more optimistic about the next three months, the first uptick in sentiment in three quarters, according to the Singapore Commercial Credit Bureau (SCCB).
The SCCB's quarterly Business Optimism Index rose to positive nine percentage points as at end-March from positive 1.11 percentage points three months earlier. Despite the upturn, current sentiment is still lower than every reading from end-March 2013 to end-September 2014.
On a year-on-year basis, sentiment for the coming April-to-June period is down 13.66 percentage points."With the exception of the financial and services sectors, the improvements in business optimism within the other sectors have been marginally visible," SCCB chief executive Audrey Chia said in a statement.
"As companies have to contend with both external headwinds and the transitional frictions brought about by the restructuring of the domestic economy, we expect the outlook to remain cautiously optimistic in the coming months."
Expectations on sales volumes turned positive, at 15 percentage points, from negative 5.71 percentage points a quarter earlier. The outlook for net profit also returned to growth, at 23.57 percentage points from negative five percentage points quarter-to-quarter.
Sentiment on inventory levels fell to negative 3.57 percentage points from positive 1.43 percentage points three months ago.
Expectations on selling prices remained positive but lower, at 2.86 per cent from 4.29 per cent, as did employment, at 10 per cent from 12.14 per cent. Predictions of new orders remained contractionary, but less so, at negative 8.7 per cent from negative 9.52 per cent.
For Q2 2015, the services sector emerged as the most optimistic sector for the second consecutive quarter with four business indicators in the expansionary region, similar to its performance in Q1 2015 when four business indicators were also expansionary. The financial sector saw the largest improvement as the second most optimistic sector with three business indicators in the expansionary region, in contrast with the previous quarter when the sector was expecting an overall contraction with four business indicators in the negative region.
Said Ms Chia: "Firms can no longer rely on traditional business models but rethink their growth strategies to enable them to be competitive and yet remain sustainable at the same time. It is no longer just about cost management but rather a focus on demand creation which could potentially expand revenue sources for domestically-oriented companies. The recent Budget 2015 initiatives should serve as an impetus for local firms to further innovate and internationalise their business activities."
With additional reporting by Mindy Tan