Singapore manufacturing and services sectors more pessimistic: Official surveys

Singapore manufacturers are expecting business to weaken in the next few months due to the soft global economic conditions.
Singapore manufacturers are expecting business to weaken in the next few months due to the soft global economic conditions.PHOTO: ST FILE

SINGAPORE - Both manufacturing and services firms are more pessimistic about their prospects ahead, going by separate surveys released on Friday (Oct 30) by the Singapore Economic Development Board (EDB) and Statistics Singapore.

EDB said its latest quarterly survey that a bigger majority of manufacturers expect business to weaken due to soft global economic conditions, especially the slowdown in China and weak oil and commodity prices.

Overall, a net weighted balance of 16 per cent of manufacturers expect less favourable business conditions for October to March compared with April to September. A weighted 26 per cent foresee business conditions to deteriorate compared to 10 per cent who expected them to improve.

EDB said the more downbeat outlook was widespread with most industry clusters foreseeing weaker business prospects ahead except for those in biomedical manufacturing. A net weighted balance of 36 per cent of firms here expect business conditions to improve.

The chemicals and the electronics clusters are the most pessimistic, with a net weighted 22 and 38 per cent of firms, respectively, expecting business to get worse in the next two quarters from China's slowing economy. The chemical sector is also weighed down by an excess supply of refined petroleum and chemical products in the region.

In the precision engineering cluster, a net weighted 18 per cent of manufacturers expect business conditions to soften, in view of the weak external economic conditions and lacklustre outlook in the global electronics and oil & gas industries.

In the general manufacturing cluster, a net weighted 15 per cent of firms expect a less favourable outlook in the six months ahead. While the majority of the firms in the food, beverage and tobacco and printing segments see business staying the same, firms in the miscellaneous industry segment foresee business activity to be weak due in part to the slowdown in local construction activities.

A net weighted balance of 13 per cent of firms in the transport engineering cluster expect business conditions to deteriorate in the period October 2015 - March 2016, compared to a quarter ago. This is largely led by the marine and offshore engineering segment which continues to be weighed down by declining offshore exploration and drilling activities on the back of low crude oil prices.

For the services sector, a net weighted balance of 6 per cent of firms expect less favourable business conditions for October to March compared with April to September.

Generally, the service sector is not as pessimistic as manufacturing. The majority of firms (a weighted 64 per cent) expect business to remain the same, while 15 per cent see it improving and 21 per cent expect it getting worse.

Statistics Singapore said business sentiments are mixed within the sector. With the upcoming year-end holidays and festive season, the accommodation, food and beverage services and retail trade industries are among those which foresee favourable business conditions for Octover to March compared to April to September.

On the other hand, industries such as real estate, wholesale trade and transport & storage services are less optimistic in their outlook.

Real estate developers are especially negative in their outlook as they do not expect the government to lift any time soon its property cooling measures including the Additional Buyer's Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR). The developers also cited the uncertain economic outlook for the negative sentiments, which may lead to buyers holding back on purchases of properties.

With all this, a net weighted balance of 22 per cent of firms in the real estate industry anticipate business to deteriorate in the coming months.