Services sector hopeful as year-end holidays near: Poll

Separate survey shows manufacturing still wary over Covid-19, US-China trade tension

The F&B services and retail trade industries expect to hire more for the rest of the year. ST PHOTO: GAVIN FOO

Companies in Singapore are less pessimistic about business for the next six months, with those in services registering a sharp improvement in outlook with the easing of Covid-19 curbs on travel and gatherings, as well as the prospect of year-end holidays and the festive season.

The latest sentiments were captured in separate surveys released yesterday by the Department of Statistics (SingStat) and the Economic Development Board (EDB).

In the services sector, a net weighted balance of 5 per cent of firms polled predicted slower business for the six months from this month to March. Though the overall outlook stayed negative, this was a big step up from the net weighted balance of 31 per cent which saw weaker prospects in SingStat's survey for the previous quarter.

For manufacturing, a net weighted balance of 3 per cent of firms predicted less favourable business conditions, due to uncertainty over the Covid-19 outbreak and global economy and United States-China tensions, the EDB survey showed. This level, however, was better than the 7 per cent that did so in the previous quarterly survey.

Within the services sector, several industries expect conditions to improve such as the recreation, community and personal services; food and beverage services; retail trade; and information and communications industries. Conversely, those in accommodation, real estate and business services industries remained downbeat.

In terms of jobs, the services sector expects the overall employment level to drop in the fourth quarter of this year. The food and beverage services and retail trade industries expect to hire more for the rest of the year, anticipating increased demand in the upcoming year-end holidays and festive season.

However, firms in the accommodation and transport and storage industries expect less hiring in the fourth quarter. Hotels and air transport firms expect slow pick-up in demand for their services due to global travel curbs that remain.

Among manufacturers, a net weighted balance of 8 per cent of manufacturers plan to hire fewer workers in the next three months. All manufacturing clusters, except electronics and biomedical, have projected a smaller workforce for the fourth quarter.

Within the manufacturing sector, a net weighted balance of 12 per cent of firms in the general manufacturing cluster anticipate business conditions to pick up. The positive sentiment is led by the miscellaneous industries segment, which expects higher demand for construction-related materials as more local construction activities have slowly restarted.

A net weighted balance of 9 per cent of firms in biomedical manufacturing are upbeat. They are led by the medical technology segment, which expects export orders to increase.

In transport engineering, a net weighted balance of 4 per cent of firms expect better prospects. The land segment sees higher export demand for car parts, while the marine and offshore engineering segment expects more foreign workers living in dormitories to return to work, even as the global oil and gas market remains in the doldrums.

In electronics, 16 per cent of firms are downbeat. Within the cluster, semiconductor firms anticipate seasonally weaker chip demand in the next six months, and express caution over elevated risks such as Covid-19 and US-China tensions. In contrast, the other electronic modules and components segment expects more orders from the 5G market in the months ahead.

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A version of this article appeared in the print edition of The Straits Times on October 31, 2020, with the headline Services sector hopeful as year-end holidays near: Poll. Subscribe