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Singapore manufacturers, services firms less upbeat about next 6 months

MANUFACTURING and services firms in Singapore have become less optimistic about business prospects in the next six months, although both sectors expressed overall slight positive sentiment, according to two surveys released on Tuesday.

The surveys, covering firms’ expectations for April till September 2019, were released by the Economic Development Board (EDB) for the manufacturing sector and the Department of Statistics (Singstat) for services.

Most manufacturing firms expect business conditions to stay similar to those of the first quarter of this year. A weighted 6 per cent expect prospects to improve in the next six months, while a weighted 5 per cent foresee prospects weakening.

This yields an overall net weighted balance of 1 per cent of manufacturers anticipating an improved business situation – showing a worsening of sentiment compared to last year’s survey in the same period, where a net weighted balance of 13 per cent of manufacturers were optimistic about the April-September period in 2018.

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Within the manufacturing sector, the transport engineering cluster is the most upbeat, while the general manufacturing industries cluster is the most pessimistic.

Manufacturing output expectations are slightly optimistic, with a net weighted balance of 1 per cent anticipating higher output compared to Q1 2019, EDB said.

On the labour front, outlook was mixed among the manufacturing clusters.

The biomedical manufacturing cluster, as well as the marine and offshore engineering segment within the transport engineering cluster, expects to employ more workers in the second quarter of this year, compared to the previous quarter.

On the other hand, the electronics and general manufacturing industries clusters project a smaller workforce in the second quarter.

Services sector

In the services sector, most firms also expect business activity to remain the same in the next six months compared to the first quarter, Singstat said.

A weighted 15 per cent of services firms are optimistic while a weighted 11 per cent foresee slower business.

This makes for a net weighted balance of 4 per cent who expect more favourable business conditions – less upbeat than the 8 per cent recorded for April till September last year, but an improvement from the negative net weighted balance of 4 per cent in the previous quarter for January till June 2019.

The information and communications, wholesale trade, and financial and insurance industries had the rosiest outlook for the next six months. In contrast, the retail trade, transport and storage, and food and beverage services industries are the gloomiest.

As for operating receipts, a net weighted balance of 6 per cent of services firms expect to see an increase for Q2 2019, compared with Q1 2019.

In line with their positive outlook on business conditions, firms in the financial and insurance, information and communications, and wholesale trade industries also expect a higher level of operating receipts in the second quarter this year.

On the other hand, firms in the retail trade as well as transport and storage industries expect a lower turnover in the second quarter.

In terms of employment, a net weighted balance of 2 per cent of services firms expect an increase in hiring activity for Q2 2019.

Singstat said the recreation, community and personal services, information and communications, and business services industries expect to hire more in the next three months, while firms in retail trade, and food and beverage industries foresee hiring less as they anticipate slower business activity.