Singapore services receipts growth slows to 10.9% in Q4 2022, will continue to ease in 2023

SINGAPORE’S services industries will likely experience easing revenue growth in at least the first quarter of 2023 as global growth slows, economists said after the Department of Statistics (Singstat) released Q4 data on Monday (Feb 27).

Year on year, services industries recorded a 10.9 per cent rise in business receipts in the final quarter of 2022, easing from the revised 15.9 per cent growth rate in Q3.

The slowdown was expected, with slower growth in gross domestic product (GDP), said Maybank economist Chua Hak Bin.

Based on advanced GDP estimates from the Ministry of Trade and Industry, services-producing industries grew a slower 4.1 per cent on the year in the fourth quarter, down from the 5.8 per cent in the third quarter, he said.

On a non-seasonally adjusted quarterly basis, business receipts were up 2.9 per cent in Q4, widening from the previous quarter’s 2.6 per cent increase.

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

CIMB economist Song Seng Wun said that the growth came as Covid-era restrictions were lifted, and more travellers entered Singapore.

But Chua noted that reopening tailwinds are dissipating, with growth “naturally” slowing as reopening sectors (food and beverage, hospitality and retail) normalise to pre-pandemic levels.

“The manufacturing downturn is also dampening trade-related services, including wholesale trade services and shipping,” he added.

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Still, he is not expecting a contraction in takings, but for services receipts to grow more slowly in Q1. “China’s reopening will help cushion the impact from slowing growth in the US and Europe,” he said.

Song agreed that growth will normalise into the rest of 2023 – as long as the global economy can avoid a recession.

“So far, global labour market conditions are still quite supportive of global growth,” he said. “You cannot be heading into a recession if firms are still mostly hiring than firing.”

All services industries in the index grew year on year, and most grew quarter on quarter, except for transportation and storage.

Recreation and personal services marked the largest jump in takings on the year, up 36.8 per cent.

This was mainly due to increased earnings of firms in the gaming and attractions segment in Q4 2022, compared to the year-ago period, when stricter Covid-19 restrictions on operating capacity and social gathering group sizes were in place, Singstat said.

In Q3, this industry had been up 70.7 per cent on the year.

Also registering a marked increase was the information and communications industry, on the back of increases in business activities of software developers and IT consultancy firms.

Double-digit growth was also observed in finance and insurance, real estate and professional services.

On a quarterly basis, business receipts rose the most for professional services – a double-digit growth of 13.3 per cent.

“Within the industry, firms engaged in legal, head office and business and management consultancy activities reported an increase in revenue,” Singstat said.

Marking the second-largest increase on the quarter was information and communications, for which takings had fallen 2.1 per cent in Q3.

In transportation and storage, the only industry to decline quarter on quarter in Q4, lower revenue received by shipping lines and freight forwarders led to the fall.