SINGAPORE - Businesses are more pessimistic than at any time in the past three years, according to a survey out on Tuesday.
It found that 56 per cent of businesses cited global economic uncertainty as the main challenge facing them in 2016 while 21 per cent pointed to higher costs.
Other factors cited included reduced sales, foreign labour issues, and lack of financing.
The quarterly survey by the Singapore Commercial Credit Bureau polled 200 business owners and senior executives across major industries here on six indicators - expectations of upcoming quarterly sales, profits, employment, new orders, inventories and selling prices.
The index the data generates hit a three-year low of -2.93 percentage points for the first quarter of 2016, down from 0.14 percentage points for this quarter.
Powermark Battery & Hardware Trading, which makes batteries for the marine and telecoms industries, highlights many of the issues companies are facing.
The weaker business sentiment and lower oil prices have hit its revenue expectations, said accounts manager Ng Zhihan, who added that the firm is seeking to sell its batteries online to overseas markets to compensate for the decrease in revenue here.
Lourve, another local firm, also expects demand for its interior design consultancy and refurbishment services to remain muted at the start of next year.
Retail and commercial clients have been more hesitant to spend heavily due to the uncertain economic outlook, said finance director Lee Kia Tiow.
Commercial clients, wary of cashflow needs, have reduced renovation work and negotiated longer payment terms, which has led Lourve to reconsider taking up certain projects.
Labour costs for carpenters hired mainly from Malaysia and tilers have also risen due to fewer young people joining the industry.
The costs involved in hiring a staff for demolition work have risen about 30 per cent in the past two years, in part due to foreign worker levies, and are now about $1,800 a month, Mr Lee said.
"(This is) equivalent to a fresh diploma student out on the market," he noted. The firm has had to pass on these costs to its customers, who can also be strapped for cash.
But some firms do not expect to be hit as heavily by the weaker business sentiment.