Services receipts growth eases to 7.9% in Q1 in 3rd straight quarter of decline

BUSINESS receipts in Singapore’s services industry grew 7.9 per cent year on year in the first quarter, down from a revised 11.7 per cent in Q4, as revenue growth continued to ease for the third straight quarter, data from the Department of Statistics Singapore (SingStat) showed on Friday (May 26).

On a non-seasonally adjusted quarterly basis, business receipts contracted 4.6 per cent in Q1, reversing from Q4’s 3.9 per cent growth.

SingStat’s business receipts index excludes wholesale trade, retail trade, and accommodation and food services, which are tracked separately.

DBS economist Chua Han Teng said the moderation in business receipts on a yearly basis reflects “further normalisation” after a bout of strong growth triggered by the post-pandemic reopening boost.

“While overall growth moderated, business receipts still expanded above the average pre-pandemic trend of 5.9 per cent year on year between 2017 and 2019,” he added.

The lower growth in business receipts also reflects the slower growth in the services industries in Q1, said Maybank senior economist Chua Hak Bin. The latter moderated to 2 per cent year on year in Q1, from 4 per cent in the previous quarter, data from the Ministry of Trade and Industry showed the day before.

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“Business receipts are measured in current prices, which are inflated by the price increases over the past year,” he added.

Apart from the transportation and storage, as well as administrative and support services industries, all industries registered higher receipts on a year-on-year basis, unlike the previous quarter, when no industry saw a contraction in takings.

The recreation and personal services industry made the highest gains with an increase of 40.3 per cent in turnover, a slight improvement from the 39.2 per cent in the previous quarter.

SingStat said this was mainly due to higher earnings of firms in the gaming and attractions segment in Q1, as the companies’ business activities increased following the removal of all Covid-19 safe-management measures in Singapore.

In second place was the information and communications industry, which recorded a 15.3 per cent year-on-year growth in business receipts, with software developers and IT consultancy firms reporting higher revenue.

In contrast, business receipts for the transportation and storage industry shrank 6.8 per cent. This was due to a fall in receipts for the water transport segment, largely because of lower revenue received by shipping lines.

DBS’ Chua said this was “unsurprising”, as outward-oriented and trade-related services suffered alongside the doldrums in the manufacturing sector, which faced a deeper contraction in Q1.

“In contrast, year-on-year growth of information and communications industry business receipts did relatively well among other segments, given the importance of technology and digitalisation towards improving long-term productivity, and would likely stay supported,” he said.

On a quarterly basis, the transportation and storage industry recorded a 13.9 per cent contraction, due mainly to the shipping lines and freight forwarders receiving lower revenue.

Sequentially, the worst-performing industry was professional services, whose revenue shrank 14.4 per cent. Firms engaged in legal, head office and business and management consultancy activities were among those that reported lower sales, SingStat said.

Looking ahead, Maybank’s Dr Chua said he expects business receipts to grow more slowly in Q2 and possibly stagnate in the second half of the year as the reopening tailwinds fade.