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Singapore firms pessimistic about next six months, but less than before: surveys
SINGAPORE firms expect business conditions to worsen from October till next March, though the gap between pessimists and optimists has been closing, according to official quarterly surveys on Friday.
The difference was clearest in the services sector, where a net-weighted balance of 5 per cent of firms expect worse conditions - an improvement from 31 per cent in the previous quarterly survey, which covered expectations for July till December 2020.
In manufacturing, a net-weighted balance of 3 per cent expect the operating environment to worsen in the next six months compared to the third quarter of 2020, improving from 7 per cent in the previous quarterly survey.
This was with a weighted 18 per cent of firms seeing a better business outlook, while a weighted 21 per cent expect a worse one, according to the Singapore Economic Development Board.
The general manufacturing cluster was the most optimistic, with a weighted 12 per cent expecting business conditions to improve. This was led by the miscellaneous industries segment, which expects higher demand for construction-related materials such as ready-mixed concrete and steel structural products, as more local construction activities have slowly restarted.
Also optimistic were respondents in biomedical manufacturing and transport engineering, with positive net-weighted balances of 9 per cent and 4 per cent respectively.
In contrast, in the chemicals cluster, a net-weighted balance of 3 per cent expect a poorer outlook.
The electronics cluster - which has been seeing strong growth - was the gloomiest, with a net-weighted balance of 16 per cent expecting less favourable business prospects. Firms in the semiconductors segment expect seasonally weaker chip demand and are cautious about risks such as Covid-19 and tensions between the United States and China. The other electronic modules and components segment, however, expects more 5G-related orders in the months ahead.
As for output in the fourth quarter of 2020, a weighted two-thirds of firms expect this to remain similar to the preceding quarter.
The precision engineering cluster was the most optimistic, with a net-weighted balance of 34 per cent expecting increased output.
In general manufacturing, a net-weighted balance of 4 per cent expect higher production, again led by miscellaneous industries due to the pick-up in construction.
More pessimistic are the chemicals, electronics, and biomedical clusters, with net-weighted balances of 4 per cent, 5 per cent, and 16 per cent respectively expecting lower production in Q4.
In services, 25 per cent of firms expect business conditions to worsen in the next six months, but 20 per cent expect them to get better, according to the Department of Statistics.
Expectations were similar for operating receipts for the fourth quarter of 2020, with 25 per cent expecting lower takings and 20 per cent expecting higher ones.
Most optimistic about the coming six months were the recreation, community, and personal services, as well as food and beverage services, with net-weighted balances of 11 per cent and 10 per cent respectively.
Also seeing better times ahead were retail trade, information and communications, and financial and insurance services.
Most pessimistic were accommodation services and real estate services, with net-weighted balances of -51 per cent and -45 per cent respectively.
Business services excluding real estate, transport and storage, and wholesale trade also had negative net-weighted balances.
On the employment front, the bulk of firms expect employment levels to remain similar in Q4 - a weighted 82 per cent in manufacturing, and 71 per cent in services.
But overall, the net-weighted balances still point to firms expecting to hire fewer workers - -8 per cent in manufacturing, and -7 per cent in services.
All manufacturing clusters, except electronics and biomedical manufacturing, expect a smaller workforce in Q4.
In services, food and beverage services and the retail trade expect to hire more, with the upcoming year-end holidays and festive season.
Accommodation had the bleakest employment forecast at -60 per cent, followed by transport and storage at -20 per cent, amid continuing global travel restrictions.