SMEs more upbeat about business prospects in Q2, Q3
SBF-DP Info survey finds sales and profit expectations at 3-year high; firms' access to financing also picking up
Singapore
OPTIMISM seems to be on the rise for small and medium-sized enterprises (SMEs), with expectations of strong sales and profit performance in the next two quarters.
The Singapore Business Federation-DP Info (SBF-DP) SME Index ticked up from 51.2 to 51.8 in its latest survey, signalling an improved outlook for Q2 and Q3 2018.
A score above 50 indicates an expectation of growth, while a score below 50 signals a possible contraction.
Findings showed that all industries recorded overall index scores of above 50, indicating a positive view of the coming six months.
Business Services continues to be the most optimistic with an overall index score of 52.1.
They are closely followed by the Commerce/Trading sector with a score of 52.0, and the Transport/Storage Sector with a score of 51.9, attributed to improved trading conditions on the back of a stronger global economy.
The other three sectors include Construction/Engineering, Manufacturing, and Retail/F&B, which all showed improvements from the previous survey.
In addition to an overall score, the Index includes SMEs' take on turnover expectations and profit expectations, measured on a scale of one to 10.
According to the findings, SMEs expect the next two quarters to deliver their strongest sales and profit results in three years.
All six industries expect their turnover to rise during the next six months, lifting the turnover expectations score to 5.38 - the highest score since third quarter of 2015.
As many SMEs are focused on the domestic market, an expected increase in sales strongly suggests a growing confidence in the Singapore economy, said a joint statement by DP Info and the SBF.
With expectations of increased revenue, the profitability expectations score also rose correspondingly to 5.28, with every sector anticipating an improvement in their bottom line. This is the best profitability expectations score since the second quarter of 2015.
On an encouraging note, SMEs' ability to access financing also seemed to have picked up, bouncing from a low of below 5 in the first half of 2017 to its latest score of 5.26.
James Gothard, general manager, credit services & strategy SEA of Experian, the parent company of DP Info, observed from the findings that the "recovery among SMEs is gaining speed".
"Many SMEs have adjusted their business models, finding greater efficiencies and productivity through investments in technology, or by focussing on aspects of their business with the most potential," he noted.
Ho Meng Kit, CEO of SBF, said that it was "good to see" that the sentiment of smaller firms improve, but cautioned on possible risks.
"Notwithstanding the optimism among our SMEs and a supportive domestic policy environment, we are mindful that recent trade disputes between the US and China could affect our growth path," he added.
Escalating global trade tensions could affect Singapore, as it is a small trade-dependent country.
The SBF-DP Info SME Index is based on a survey of more than 3,600 SMEs during January and February 2018.
