Manufacturing, services firms more downbeat in outlook, with electronics sector especially gloomy: Surveys

Sentiment was especially poor among the electronics industry, with a net weighted balance of 45 per cent of firms anticipating conditions to worsen in January to June this year compared to October to December 2018.
Sentiment was especially poor among the electronics industry, with a net weighted balance of 45 per cent of firms anticipating conditions to worsen in January to June this year compared to October to December 2018.PHOTO: ST FILE

SINGAPORE - Manufacturing and services firms are more pessimistic about their prospects for the first half of 2019, two separate government surveys showed on Thursday (Jan 31).

Manufacturers are overall downbeat about their prospects from January to June this year. A net weighted balance of 14 per cent of manufacturers anticipated a less favourable business situation from January to June this year, according to the Economic Development Board (EDB). This is much gloomier than the outlook expressed in the previous quarterly survey, where a net weighted balance of just 1 per cent of manufacturers expected buisiness to weaken.

The net weighted balance is the difference between the proportion of optimistic and pessimistic firms polled by the two agencies.

The same is true for the services sector, with a net weighted balance of 4 per cent of firms expecting business conditions to worsen in the same time period, another survey by the Department of Statistics (SingStat) showed.

This is the first time since the second quarter of 2017 that overall business sentiment among services firms slipped into pessimism.

Most industries in the manufacturing sector were downbeat. Sentiment was especially poor among the electronics industry, with a net weighted balance of 45 per cent of firms anticipating conditions to worsen in January to June this year compared to October to December 2018.

EDB also highlighted the weaker sentiment among precision engineering firms, as they foresee weaker orders amid softening demand for semiconductors, their related equipment, as well as mounting worries over global trade tensions.

On balance, 24 per cent of precision engineering firms were less optimistic about the first half of this year relative to the last quarter in 2018.

However, EDB's survey also showed some positivity among industries in the biomedical manufacturing and the transport engineering industries.

Biomedical firms were bullish about their prospects, with a net weighted balance of 6 per cent foreseeing a favourable operating environment in the next six months, as exports of medical technology are expected to remain strong in this sector.

In the transport engineering industry, a net weighted balance of 4 per cent of firms also expect conditions to improve.

This is mainly due to the marine and offshore engineering firms, as they predict a continual modest uptick in demand for oil and gas field equipment and ship repairing activities in the first half of 2019.

Overall, a net weighted balance of 2 per cent of manufacturers expect output to decrease in the first quarter this year.

Within the services sector, firms in the accommodation, transport and storage, wholesale trade, real estate and financial and insurance industries predict slower business in January to June this year, compared with July to December last year.

Firms in accommodation, transport and storage saw the biggest dip in confidence, though that could be due to comparison with the latter half of 2018, which coincides with the year-end and festive holiday season, said SingStat.

The wholesale trade, and the financial and insurance industry, were also pessimistic in the light of the ongoing United States-China trade conflict, which could have a negative impact on their businesses.

On the other hand, firms in the information and communications industry expect business prospects to improve, especially those engaged in computer consultancy and web portal services.

Firms in the food and beverage services industry expect more favourable business situation. Within the industry, fast food outlets and food caterers are among those that expect business conditions to improve over the next six months.