Manufacturers, services firms stay upbeat

Singapore

FIRMS in both the manufacturing and services sectors expect better business prospects for the second half of 2015, official surveys released on Friday show. But readings from each sector reveal differences in both the magnitude of optimism, and how sentiments have changed from a quarter ago.

While manufacturing firms are looking a little less upbeat about the six months ahead, services companies remain as optimistic about their short-term prospects as before.

However, a greater proportion of manufacturing firms expect an improvement in future conditions, compared to those in the services sector.

Of the more than 400 manufacturers polled between June and July by the Economic Development Board (EDB), 16 per cent expect the business climate to improve - slightly outnumbering the 14 per cent that see a deterioration. The rest do not expect any change.

That translates into a positive net weighted balance - the difference between the proportion of optimistic and pessimistic firms - of 2 per cent, which is lower than the 5 per cent seen a quarter earlier.

The biomedical manufacturing cluster is the most optimistic, with a net weighted balance of 33 per cent of firms anticipating better conditions in the next six months, ending December 2015.

On the other hand, firms in the chemical and transport engineering clusters have a gloomier outlook. The former registered a net weighted balance of negative 15 per cent, with the petroleum and petrochemical segments projecting a less favourable business situation.

Within the transport engineering cluster (negative 10 per cent), the marine and offshore engineering segment sees weaker orders continuing into H2 2015. This is due to low oil prices, which have affected offshore exploration and drilling activities.

A net weighted balance of 2 per cent of services firms are sanguine about their business prospects for H2 2015.

The positive magnitude is comparable with the 3 per cent registered a quarter ago, but much lower than the 13 per cent posted for the same period last year.

Overall, 17 per cent of the 1,500 enterprises polled by the Department of Statistics (DOS) between June and mid-July say business prospects look better for the six months till December, compared with the previous six months.

They marginally outnumber the 15 per cent foreseeing slower business. The rest - 68 per cent - project no change.

All industries, save real estate (negative 19 per cent) and wholesale trade (negative 5 per cent), expect better business conditions for H2 2015.

"Developers continue to cite the series of government measures, including the Additional Buyer's Stamp Duty (ABSD) and the Total Debt Servicing Ratio (TDSR) framework, as the reasons for their negative outlook," said DOS on Friday.

In contrast, prospects look brightest for the food & beverage services sector, with a net weighted balance of 21 per cent.

The accommodation industry's 14 per cent net weighted balance reflects optimism from hotels. They expect the upcoming Formula One night race and year-end holiday period to boost business volumes.