S'pore business confidence weakens for 2nd straight quarter while staying positive

SCCB chief executive Audrey Chia noted that the overall business outlook remains optimistic despite the moderation. PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Local business sentiment moderated slightly for the second consecutive quarter amid a global economic slowdown and geopolitical uncertainties, said the Singapore Commercial Credit Bureau (SCCB) on Tuesday (June 14).

Its Business Optimism Index (BOI) for the third quarter of 2022 slid to +5.1 percentage points from +5.35 percentage points in the previous quarter, although BOI rose from +4.07 percentage points in the third quarter a year ago.

SCCB chief executive Audrey Chia noted that the overall business outlook remains optimistic despite the moderation.

"However, the global uncertainties surrounding the Russia-Ukraine conflict as well as China's slower gross domestic product growth are expected to weigh on sentiments in the coming months," she said.

"The outward-oriented sectors, such as wholesale trade, are also likely to face external headwinds in the near term."

Two of six indicators in the index - namely volume of sales, net profit, selling price, new orders, inventory levels and employee count - saw improvements on a quarterly basis, as compared with only one in the second quarter.

In the third quarter, selling prices rose to +8.96 percentage points from +5.22 percentage points in the second quarter, while new orders jumped to +10.45 percentage points from +5.22 percentage points.

Meanwhile, the volume of sales fell to +2.24 percentage points from +2.99 percentage points, net profits fell to +1.49 percentage points from +2.99 percentage points, and employment levels dipped to +9.70 percentage points from +11.94 percentage points.

Inventory levels also remained contractionary, at -2.24 percentage points in the third quarter from -1.49 percentage points in the second quarter.

On a year-on-year basis, however, employment levels jumped from +3.05 percentage points, while inventory levels increased from -6.11 percentage points. Meanwhile, both the volume of sales and net profits moderately visibly from +7.63 percentage points each in 2021.

By sector, SCCB expects the transportation and construction sectors to have a brighter outlook due to a boost in tourist arrivals, as well as higher demand for construction projects.

The transportation sector improved in the quarter with four of six indicators in positive territory, as compared with three indicators in the second quarter, while the construction sector had four indicators in positive territory in the third quarter, as compared with two indicators in the previous quarter.

SCCB also noted that the financial and manufacturing sectors are the most optimistic, with all six indicators in positive territory for both sectors.

Meanwhile, the outlook for the services sector moderated slightly with five of six indicators in positive territory, while the wholesale sector remained cautiously optimistic with three indicators in positive territory.

As for the mining sector, it remains the most downbeat with all indicators in the negative zone, similar to the second quarter.

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