Manufacturers more wary about second-half outlook

Electronics, which was a key economic driver last year, saw a net weighted balance of 10 per cent of firms with a more positive outlook, down from 14 per cent previously.
Electronics, which was a key economic driver last year, saw a net weighted balance of 10 per cent of firms with a more positive outlook, down from 14 per cent previously.PHOTO: ST FILE

Electronics, precision engineering firms less upbeat; service sector cautiously optimistic

Singapore's service and manufacturing sectors both showed cautious optimism about business prospects for the second half of the year, according to separate findings released yesterday by the Economic Development Board and the Department of Statistics.

But of the two sectors, manufacturers were more wary about what lies ahead. A net weighted balance of 7 per cent of manufacturers forecast a brighter business outlook for the six months to December, down from the 13 per cent seen in the previous survey a quarter ago.

The net weighted balance is the difference between the proportion of optimistic and pessimistic firms.

Electronics, which was a key economic driver last year, saw a net weighted balance of 10 per cent of firms with a more positive outlook, down from 14 per cent previously.

Electronics orders are expected to be driven by exports of semi-conductors and other electronic modules and components segments, in anticipation of seasonal demand in the second half of the year.

A net weighted balance of 6 per cent of firms in the precision engineering cluster foresee positive business prospects, falling sharply from 39 per cent in the second quarter.

The transport engineering cluster has turned more positive, with a net weighted balance of 22 per cent of firms expecting an improvement in the second half, up from 9 per cent a quarter ago.

However, the chemicals cluster expects business prospects to worsen in the next six months, due to rising raw material costs on the back of higher oil prices.

As for the service sector, a net weighted balance of 9 per cent of firms expect more favourable business conditions, up marginally from the 8 per cent in the previous survey.

Firms in the accommodation and food and beverage service industries are more upbeat, with a net weighted balance of 38 and 37 per cent respectively, due to the year-end holidays and the festive season.

Those in the business service industry also foresee improved conditions at 17 per cent, with firms engaged in legal, management consultancy and engineering activities among those that expect an increase in demand for services.

A net weighted balance of 14 per cent of firms in the financial and insurance industry expect bright skies ahead, led by banks and insurance firms.

The real estate industry is the only one that expects less favourable business conditions.

Property cooling measures introduced last month to raise the Additional Buyer's Stamp Duty and tighten loan-to-value limits are expected to have a negative impact on the real estate market.

A version of this article appeared in the print edition of The Straits Times on August 01, 2018, with the headline 'Manufacturers more wary about second-half outlook'. Print Edition | Subscribe