Singapore firms upbeat about 2022 despite Omicron

The forward-looking Business Optimism Index reached a two-year high. ST PHOTO: GIN TAY

SINGAPORE - Singapore companies are looking ahead to 2022 with renewed optimism, though uncertainties remain over the new Omicron variant driving a new Covid-19 wave, a business sentiment index out on Tuesday (Dec 7) showed.

The forward-looking Business Optimism Index reached a two-year high as it climbed slowly from 5.78 percentage points in the fourth quarter of 2021 to 5.91 percentage points in the first quarter of next year.

A year ago the index was in the negative zone at -1.01 percentage points, after hitting an all-time low of -7.88 percentage points in the second quarter of 2020 during the circuit breaker period.

The index is compiled by Singapore Commercial Credit Bureau (SCCB), a subsidiary of Credit Bureau Asia.

SCCB chief executive Audrey Chia said: "While there is renewed optimism across most sectors for the first quarter of 2022, we have also noted a slight moderation in sentiments among certain sectors, particularly manufacturing services and wholesale trade. This is reflected in a slower pace of increase in the Business Optimism Index in the first quarter of 2022 as compared to the fourth quarter of 2021.

"There are still lingering uncertainties regarding the new Omicron variant and how this could potentially impact global economic developments. Hence, we expect the overall outlook of firms here to remain lukewarm moving into the new year."

The index tracks business sentiment through six indicators: volume of sales, net profit, selling price, new orders, inventory and employment. Taken together, they indicate how hopeful businesses are about the quarters ahead.

For Q1 2022, five of the six indicators improved year on year, with volume of sales being the exception.

The manufacturing sector was the most upbeat of all the sectors with all six indicators in the positive territory. Still, its sales volume and net profit indicators moderated while new orders fell slightly.

The financial sector had five indicators in positive territory in comparison, with a jump in employment levels.

Employment levels fell into the negative territory for the services sector, but volume of sales expanded and new orders jumped.

Sentiments within the wholesale sector cooled. Volume of sales, net profit, selling price and employment levels shrank to zero growth, while new orders slipped.

The transportation sector's outlook improved slightly, with three of six indicators in positive territory, up from just one in the previous quarter.

Similarly, the construction sector's sentiments were less downbeat compared with three months ago, with two indicators in positive territory.

The mining and agriculture sectors were the most pessimistic, anticipating volume of sales to be at -40 and -20 percentage points, respectively.

Join ST's Telegram channel and get the latest breaking news delivered to you.