SINGAPORE - Singapore businesses are mixed on their near-term prospects, but the depth of manufacturers' negativity is easing from recent months, official quarterly surveys show. In the service sector, business sentiment has slipped slightly, but remains positive.
Overall, a net weighted balance of 5 per cent of manufacturers expect business to be worse in the six months to March 2020, compared with the third quarter of 2019, according to a poll by the Economic Development Board (EDB) released on Thursday (Oct 31).
That is less severe than the net weighted balance of 11 per cent down in the doldrums in a similar poll three months before - although the outlook is still poorer than in October 2018, when a net weighted balance of 1 per cent of manufacturers girded their loins for a downturn.
The net weighted balance - the difference between the share of responses indicating improvement and deterioration - reflected how a weighted 6 per cent of manufacturers expect business conditions to pick up, while a weighted 11 per cent think business will soften.
Separately, services firms saw a net weighted balance of 1 per cent expecting business to be better in the coming half-year, the Department of Statistics (SingStat) said on Thursday.
Their hopes are slightly weaker than the outlook in the previous quarter, when the sector had a positive net weighted balance of 2 per cent, and in the year before, when it was 3 per cent.
Growth will be uneven across industries as the domestic impact of external headwinds varies, the Monetary Authority of Singapore (MAS) said in a report on Wednesday.
MAS said electronics-related sectors are expected to fare the worst in the coming quarters, while industries with strong production ties to electronics - such as transport, storage, and financial services - are mixed in outlook, with more than half of the segments in this group still growing.
Meanwhile, the rest of the economy - sectors such as construction, professional services, and food services - are going strong, despite the risks of weakening consumer sentiment.
SingStat noted that food and beverage services and accommodation companies, as well as retail trade businesses like department stores and supermarkets, expect more favourable business conditions on the uplift from the year-end holidays and festive season.
The transport and storage sector was also positive on the whole, helped by hopes of higher demand for air transport, as was the information and communications industry, which was buoyed by software publishing and Web portal service providers.
But financial and insurance services and wholesale trade companies, along with real estate service firms, were the three service industries with negative net weighted sentiment.
"Wholesalers as well as banks and finance companies expect the ongoing trade conflict between US and China to have a negative impact on their businesses," SingStat said.
Within manufacturing, the biomedical and transport engineering clusters were the only two to post positive net weighted balances in their outlook, the EDB data showed, as the volatile biomedical cluster was lifted by expectations of higher export demand for biological products.
Notably, the linchpin electronics cluster saw a net weighted balance of 7 per cent indicating a negative outlook - a sharp pick-up from the 24 per cent three months before.
This despite electronics and precision engineering manufacturers holding to an overall weak outlook, with the EDB citing "subdued demand for semiconductors and semiconductor-related equipment, as well as concerns about the US-China technology conflict".
The chemicals cluster had a broadly negative overall view of its prospects, on the back of weak refining margins and softer regional orders for mineral oil additives and fragrances.
General manufacturing was also pessimistic, with the cluster's outlook dragged further down by the food, beverages and tobacco segment's cautious stance on orders "despite the traditionally higher demand" from upcoming festivities, the EDB noted.