Singapore business sentiment positive for Q2 on improved outlook, recovery for SMEs
Sales, profits, employment among key indicators businesses expect to see better performances in
BUSINESS sentiment in Singapore has turned expansionary for the second quarter of 2021, following four quarters of negative sentiment, with improved expectations for profits and hiring as well.
On Monday, the Singapore Commercial Credit Bureau's (SCCB) latest quarterly survey of 200 business owners and senior executives showed the indicator for overall business sentiment at +3.94 percentage points for Q2, versus -1.03 percentage points in the previous quarter, and -7.88 percentage points in Q2 2020.
Quarter on quarter, all of the six indicators SCCB studies - volume of sales, net profits, selling price, new orders, inventory levels and employment levels - also improved.
In particular, businesses' expectations for net profits, employment and selling price improved the most. The indicator for net profits is up at +9.92 percentage points for Q2, from +3.85 percentage points a quarter ago.
Similarly, employment sentiment has improved to zero percentage point for Q2, from -7.69 percentage points a quarter ago. Expectations for selling price have also recovered to +1.53 percentage points for Q2, from -8.46 percentage points in the previous quarter.
That said, SCCB chief executive Audrey Chia noted that the improvement in business sentiment is uneven across different sectors, with both construction and transportation still experiencing a muted outlook from "weakness in building activities and a slower pace of border reopening amid a global surge in Covid-19 cases and a more contagious strain of the virus".
On the other hand, the financial services, wholesale trade and manufacturing sectors are continuing to experience growth and demand both locally and globally, she said.
Of the sectors SCCB surveys, the outlook for the financial sector has been the most optimistic, with positive expectations on all fronts.
Expectations for net profits, for instance, rose to +36.36 percentage points for Q2, from +9.09 percentage points in the previous quarter. Hiring sentiment also improved to +36.36 percentage points for Q2, from +27.27 percentage points a quarter ago.
Within the construction and transportation sectors, however, the outlook remains negative.
For construction, expectations for net profits are unchanged at -8.33 percentage points for Q2. Hiring sentiment also remains down, at -16.67 percentage points for Q2 - although it is an improvement from -33.33 percentage points in Q1.
Likewise in transportation, the outlook for net profits remains negative at -18.18 percentage points for Q2, from -36.36 percentage points in Q1. The outlook for hiring is also still negative, with the indicator at -9.09 percentage points for Q2, but an improvement from -18.18 percentage points in the previous quarter.
As for small and medium-sized enterprises (SMEs) in Singapore, nearly three-quarters expect their businesses to recover from the Covid-19 pandemic by April, with up to a third of them saying that their operations have already recovered, a Mastercard study found.
The study, which polled 306 small-business owners in Singapore and concluded at the end of last year, found optimistic sentiments among local SMEs in the fourth quarter of 2020.
Ninety-five per cent of the respondents said they have enough resources to navigate 2021.
The report also showed that some business have already taken steps to boost their operations.
Twenty-three per cent of business owners are making investments to prepare for economic recovery, while 56 per cent of them have already established or expanded their online presence to increase their reach to customers.
Yet, some key challenges remain, Mastercard noted.
Labour, sales and financing were three areas where small business faced difficulties, with 72 per cent, 62 per cent and 54 per cent of respondents respectively naming these as their difficulties at the end of 2020.
In addition, a third of these SMEs (34 per cent) indicated plans to move towards non-cash payment options. This comes amid the accelerated adoption of digital payment services due to the Covid-19 pandemic.
Deborah Heng, country manager for Mastercard Singapore, said: "Though the pandemic has presented Singaporean businesses with some truly unprecedented challenges . . . many SMEs here have weathered the storm, due to their own willingness to innovate, evolve and adopt new ways of doing business that meet the needs of consumers."
She added that the commercial landscape is now "more digital, more fast-paced and more fluid".
