Singapore business sentiment tumbles on potential coronavirus fallout: poll

BUSINESS sentiment among Singapore firms plunged to an all-time low in the second quarter of 2020 on coronavirus health risks and potential economic impact, according to Singapore Commercial Credit Bureau's (SCCB) latest Business Optimism Index study. 

Business sentiment tumbled to -7.88 percentage points in Q2 2020 from 5.31 percentage points in Q1 2020 as all six of the study's indicators reported negative numbers.

Year on year, the index dipped strongly, losing 12.96 percentage points from +5.08 percentage points in Q1 2019.

The Q2 2020 figure is the lowest since SCCB started polling businesses for the study in Q3 2010, the bureau told The Business Times.

The slide in optimism levels was caused by negative spillover effects of heightened global health risks posed by the virus, slowing Chinese demand and disruption of supply chains, said Audrey Chia, SCCB's chief executive officer.

Among indicators, selling price, volume of sales and new orders fell the most. Selling price slid 17.42 percentage points to -8.46 percentage points in Q2 2020 from +8.96 percentage points in Q1 2020.

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Volume of sales dropped 16.92 percentage points to -9.95 percentage points from +6.97 percentage points and new orders fell 16.42 percentage points to -12.44 percentage points from +3.98 percentage points.

From late February to early March, the study polled 200 business owners and senior executives representing major industry sectors across Singapore, with figures calculated by subtracting the percentage of respondents expecting decreases from the percentage expecting increases, said SCCB.

Among sectors, only transport and finance had any positive indicators. Transport's only positive indicator - inventory levels - jumped to +42.86 percentage points from -14.29 percentage points while net profits was the sole positive indicator for finance, down to +16.67 percentage points from +100 percentage points.

In construction, selling price tumbled to -30 percentage points from +30 percentage points while inventory levels dropped to -30 percentage points from +10 percentage points.

The services sector saw volume of sales sentiment diving to -51.61 percentage points from +54.84 percentage points while net profit dropped to -19.36 percentage points from +54.84 percentage points in Q1 2020.

Manufacturing had the largest drops in selling price and new orders. Both fell to -10 percentage points from +15 percentage points.

"The recent Budget 2020 measures such as the Stabilisation and Support Package to help businesses tide through the Covid-19 outbreak will to some extent provide some short-term relief to firms in managing their cash flow and manpower," said Ms Chia.

However, Ms Chia warned that with so many uncertainties in the trajectory and development of the spread of Covid-19, the downside risks and potential disruptions are real.

"Firms will have to brace for tougher times and continued uncertainties ahead."