SMEs forecast modest growth outlook for next 6 Months

Singapore SMEs are modestly optimistic about their business prospects for this quarter to early 2015, with firms from the business services and construction/engineering sectors the most confident.

The latest Singapore Business Federation (SBF)-DP Information Group (DP) SME Index - a six-month forward-looking index which measures the sentiments of SMEs - rose by 1.1 per cent to 55.5 points for this quarter. A score above 50 in the index indicates that SMEs have a positive outlook for their business prospects for the next six months.

Overall turnover expectations increased to 5.71 points from 5.65 points last quarter, led by strong outlook from the business services and construction/engineering industries. Conversely, softening global demand has affected the commerce/trading, manufacturing and transport/storage SMEs, with these three sectors reporting lower revenue expectations in the next six months.

A strong emphasis by the government to improve productivity has strengthened sentiments among business services SMEs (which posted a sub-index score of 56.5 points from 54.8 points last quarter). Firms in this sector are projecting more projects relating to technology applications and consultancy to fuel their profit gains in the next six months.

Business services SMEs are also anticipating business expansion in the next two quarters, with greater access to funding to support capital investment initiatives.

Construction/engineering SMEs are positive despite domestic labour restraints, primarily driven by more construction works expected in the next six months.

The Index which measures SME sentiments from October 2014 to March 2015, is based on 3,000 interviews with SME owners and managers, and the financial performance of SMEs. Five industry sectors are tracked: Business Services, Commerce/Trading, Construction/Engineering, Manufacturing, and Transport/Storage.