Manufacturing upbeat outlook dips, but services sector holds steady

The services and manufacturing sectors are cautiously optimism about business prospects for the second half of 2018.
The services and manufacturing sectors are cautiously optimism about business prospects for the second half of 2018. PHOTO: REUTERS

SINGAPORE - Singapore's services and manufacturing sectors both showed cautious optimism about business prospects for the second half of the year, according to separate findings released on Tuesday (July 31) by the Economic Development Board (EDB) and the Department of Statistics (DoS).

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 2018, 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 driver of the economy in 2017, saw a net weighted balance of 10 per cent of firms with a more positive outlook, down from 14 per cent previously. Electronics orders is expected to be driven by exports of semiconductors and other electronic modules & components segments, in anticipation of seasonal demand in the second half of 2018.

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 Q2.

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 of 2018, up from 9 per cent 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 services sector, a net weighted balance of 9 per cent of firms expects more favourable business conditions, up marginally from the 8 per cent recorded in the previous survey.

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

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

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

The only industry which expect less favourable business conditions are firms in the real estate industry. In particular, real estate developers expect the recent government property cooling measures including the additional buyer's stamp duty (ABSD) and loan-to-value limits to have a negative impact on the property market.