S'pore business confidence falls to one-year low

[SINGAPORE] Business confidence in Singapore slipped to its lowest level in a year for the final quarter of this year, as reverberations from global uncertainties sparked by geopolitical risks cast a pall over local firms, a survey has found.

The latest Singapore Commercial Credit Bureau (SCCB) quarterly study on business confidence found overall sentiment for the fourth quarter to have taken a relative beating, with the Business Optimism Index (BOI) falling for the second straight quarter to a year's low of +10.79 percentage points.

This compares poorly to the previous score of +14.65 percentage points recorded in the third quarter; the figure is even more moribund when compared with 2013's final quarter reading of +33.98 percentage points.

SCCB chief executive Audrey Chia said: "Recent market volatilities and political instability in various parts of the world have weighed on the sentiments of local firms with sizeable global and regional footprints.

"On the other hand, we have the domestically oriented small and medium-sized enterprises which continue to contend with rising cost pressures and manpower issues."

Business optimism appears to have waned across all six parameters considered - sales, net profits, selling prices, new orders, inventory levels and hiring - between this period and the year-ago one.

Notably, the manufacturing sector suffered a sharp contraction in new orders; optimism levels slid into contractionary territory for the first time since the first quarter of 2012.

More precisely, the BOI score for new orders in the manufacturing sector dived from +26.7 percentage points a year ago and +14 percentage points a quarter ago to -13.04 percentage points for the final quarter.

That business sentiment has been this hard hit may not be a big surprise, given that Singapore's Purchasing Managers' Index (PMI) had reverted to contraction mode in August, falling below the 50 mark with a 49.7 reading.

A reading above 50 denotes expansion, while one under 50 points to a contraction in the manufacturing sector. August's under-50 reading marked the first contraction since December 2013.

Optimism over three business indicators, namely, volume of sales, net profits and inventory, took the sharpest dives over this period.

In terms of gauging business confidence by sectors, the wholesale and construction businesses seemed most optimistic. Even so,a cooling private residential market has somewhat dampened confidence in construction.

The financial industry was ranked third in terms of optimism, from an uptick in performance of the financial intermediation cluster, while the services sector - hit by a fall in tourist arrivals in light of the recent aviation disasters - tumbled from the top to fourth most optimistic sector.

But there are silver linings. Ms Chia said: "While growth within certain sectors such as services and manufacturing have remained subdued, optimism levels within the financial and wholesale trade sectors have made marked improvements."