More optimism among Singapore companies in Q2

Companies are turning more optimistic about the second quarter of this year, after adopting a warier stance in the first three months.

The Singapore Commercial Credit Bureau said on Monday that its latest Business Optimism Index (BOI) showed an improvement in the outlook for the coming quarter.

Its index score rebounded to 22.66 percentage points for the second quarter, from 13.13 percentage points for the first quarter. This score is obtained by subtracting the percentage of pessimistic firms from the percentage of optimistic firms.

The measure is based on a business sentiment survey designed to capture business expectations. It tracks business parameters including net profits, selling prices, new orders, inventory levels and employee headcounts, and is commonly used worldwide to analyse major trends and issues concerning the business community.

The index also indicated that companies are becoming more upbeat about hiring. The employment sub-index rose from 10.5 percentage points in the first quarter to 13.14 percentage points for the second quarter.

Other indicators, such as optimism about net profits and sales volume, increased more sharply, with the transportation and financial segments seeing the biggest climbs.

Selling prices are also expected to increase. The sub-index rose from 6.3 percentage points to 8.76 percentage points.

However, inventory levels are expected to see a sharp drop - its sub-index dippedfrom 11.9 percentage points to only 1.46 percentage points.

Audrey Chia, SCCB's chief executive officer, said that as growth momentum in the local economy gathers pace, firms across most industries are anticipating better prospects this quarter compared to the first quarter of the year.

She added: "The recent measures announced in Budget 2014 to improve productivity, drive innovation and skill development may have also contributed to the improved outlook."