Singapore business sentiment slips for 3rd straight quarter

Singapore

SINGAPORE businesses are less confident about prospects for the second quarter of 2019, making it the third straight quarter of waning sentiment, going by the latest quarterly Business Optimism Index released on Tuesday by the Singapore Commercial Credit Bureau (SCCB).

The overall index came in at +5.08 percentage points for Q2 2019, down from the +7.19 percentage points in Q1 2019. On a year-on-year basis, the index moderated further, from the +8.50 percentage points in Q2 2018.

The figures, derived from a survey of 200 business owners and senior executives, represent the net percentage of respondents expecting improvements in the coming quarter compared to the same period last year.

Financial and services sectors have emerged as the most optimistic sectors; all six indicators - volume of sales, net profits, new orders, employment levels, selling price and inventory levels - were in the positive region for Q2 2019.

The upbeat outlook for financial services was largely driven by robust demand within the insurance services sub-segment, SCCB said.

Though the services sector had all six indicators in expansionary zone for the second quarter, three of the six, namely new orders, inventory levels and employment, showed signs of downward moderation.

In the construction sector, there were continued improvements for Q2 2019. Three indicators - volume of sales, inventory levels and employment - were in the positive region.

Separately, manufacturing and wholesale saw downward moderations in outlook.

SCCB attributed Q2's further moderation in manufacturing to an expected slowdown in the electronics and precision-engineering sub-segments.

Likewise, sentiment within the wholesale sector took a turn for the worse on the back of a weaker performance in the wholesale trade of machinery and equipment.

SCCB chief executive Audrey Chia said: "The moderation in business sentiment for the next quarter should come as no surprise in light of weaker external demand, which has hit wholesale trade and manufacturing. This is further exacerbated by the chain effects of a slowdown in China, which has led to a moderated outlook within the region."

She added: "However, the services and financial sectors will remain key drivers of growth for H1 2019.

"Overall, we expect the outlook to remain relatively positive, given the recent Budget 2019 initiatives, which were announced to provide support for firms to innovate and remain adaptable."