S'pore business confidence rebounds for Q2: study

[SINGAPORE] Business optimism for the upcoming quarter has taken a turn for the better, with more companies expecting increases in sales, profits, employment, new orders, inventories and selling prices.

The cheerier outlook for the second quarter of 2014 is thanks to signs of healthy expansion in the global economy, said the Singapore Commercial Credit Bureau (SCCB) yesterday in its latest quarterly Business Optimism Index (BOI) study.

The overall BOI score rebounded from +13.13 percentage points for the first quarter to +22.66 percentage points for Q2.

For Q4 2013, the overall BOI score stood at +33.98 percentage points.

Compared to a year ago, SCCB said that the overall BOI score for Q2 has "improved significantly" from +10.73 percentage points.

The SCCB polled 200 companies in late March, asking them to make projections about their business prospects in the coming quarter.

The index figures used in the survey represent the net percentage of respondents expecting higher business activity compared with the same quarter of the previous year. The indices are calculated by subtracting the percentage of respondents expecting decreases from the percentage expecting increases.

All six business indicators remained in expansionary mode for Q2. As with the previous quarter, Singapore firms remain most optimistic about their volume of sales and net profits.

Said SCCB's chief executive officer Audrey Chia: "As growth momentum in the local economy gathers pace, firms across most industries see brighter prospects this quarter. For the record, overall BOI has been expansionary for the past five consecutive quarters. These findings also correlate strongly with the uptrend we have seen in GDP growth since the first quarter of 2013."

SCCB said that the overall BOI score hit the contractionary region in Q1 2013, when quarter-on-quarter GDP growth was 1.5 per cent and year-on-year GDP growth was merely 0.6 per cent.

"The recent measures announced in Budget 2014 to improve productivity, drive innovation and skill development may have also contributed to the improved outlook. Firms would have recognised how important the enhancements made to the PIC (Productivity and Innovation Credit) and R&D (research & development) schemes are in helping them cope with rising business costs as well as ensuring sustainable growth in the long-term," added Ms Chia.

But whether the increased business confidence can be sustained remains to be seen, said SCCB. Ms Chia cited external challenges - such as China's weakening growth and the possibility of an interest rate hike in the second half of 2014 by the US Federal Reserve - as risks to look out for.