Singapore business sentiment improves further in Q4: SCCB

BUSINESS confidence among local businesses improved further in the fourth quarter of 2021, on the back of relatively resilient demand in the manufacturing and financial services sectors.

The Singapore Commercial Credit Bureau (SCCB) said on Tuesday that its latest overall quarterly Business Optimism Index (BOI) stood at +5.78 percentage points for Q4, up from +4.07 percentage points the previous quarter and -4.97 percentage points in the year before.

Four out of six indicators improved on the quarter, compared with three indicators in Q3 2021. Business sentiment over employment levels saw the most improvement, jumping to +12.12 percentage points from +3.05 percentage points in Q3.

Expectations for the volume of sales moderated slightly to +7.52 percentage points in Q4 from +7.63 percentage points in Q3, while net profits rose to +9.63 percentage points from +7.63 percentage points in the previous quarter.

New orders rose to +10.69 percentage points, from +9.92 percentage points in Q3, while sentiment for inventory levels inched up to -5.35 percentage points, from -6.11 percentage points in the previous quarter.

Selling price, however, was down to 0 percentage point, from +2.29 percentage points in Q3 2021.

Outlook for the financial and manufacturing sectors remained upbeat, with all six indicators in positive territory for both.

The financial sector was the most optimistic. Both volume of sales and net profit continued to rise in Q4, increasing to +41.67 percentage points and +50 percentage points respectively from +36.36 percentage points in Q3.

However, the outlook for new orders moderated slightly to +33.33 percentage points from +36.36 percentage points the previous quarter, while inventory levels dipped to +8.33 percentage points from +9.09 percentage points.

For manufacturing, both volume of sales and net profit rose to +11.11 percentage points in Q4, from +10.71 percentage points in Q3. New orders, however, moderated to +18.52 percentage points from +25.0 percentage points in Q3.

On the other hand, the construction and transportation sectors were largely downbeat in Q4.

Although the outlook for the construction industry improved slightly, three out of six indicators were still in the contractionary zone. Improvements in sentiment were observed for the volume of sales, net profit, inventory levels and employment levels.

Meanwhile, expectations for the transportation sector remained weak. However, the sector saw sentiment for volume of sales and net profit improving to -8.33 percentage points from -18.18 percentage points the previous quarter.

Outlook for new orders and employment levels also rebounded. However, selling price remained contractionary, while inventory levels were flat.

Overall, despite the increased optimism for Q4, significant downside risks remain as the local economy is still exposed to the lingering domestic and global uncertainties of Covid-19, said SCCB chief executive Audrey Chia.

"The recent regulatory developments in China and geopolitical uncertainties have also weighed on the overall sentiments," she added.