Sentiment sinks among Singapore manufacturers, services sector less optimistic

Manufacturing - which makes up about one-fifth of Singapore's economy - has been roiled by uncertainties from the trade conflict, slowing demand in China, and the peaking of the semiconductor cycle in the past year.
Manufacturing - which makes up about one-fifth of Singapore's economy - has been roiled by uncertainties from the trade conflict, slowing demand in China, and the peaking of the semiconductor cycle in the past year.PHOTO: ST FILE

SINGAPORE - Business sentiment for the second half of 2019 fell sharply among manufacturers in Singapore on the back of global trade tensions, according to the latest quarterly survey by the Economic Development Board (EDB).

A weighted 22 per cent of manufacturers expect a softer business outlook for the period between July to December 2019, while only a weighted 11 per cent anticipates business conditions to improve.

Overall, this equates to a net weighted balance of 11 per cent of manufacturers predicting a declining business situation for the second half of the year.

This contrasts with the net weighted balance of 7 per cent of firms which expected an improved business outlook in the same period in 2018.

Business sentiment also worsened compared to the previous quarter, which saw a net weighted balance of 1 per cent of manufacturers anticipating an improved business situation for the period between April and September 2019.

Within the manufacturing sector, the biomedical manufacturing cluster is the most optimistic, supported by the pharmaceuticals segment which anticipates higher export demand for biological products.

In contrast, the chemicals, electronics and precision engineering clusters are less optimistic about business prospects in the second half.

 
 
 

The chemicals cluster is concerned about declining refining margins and weaker demand from the region, particularly China. In the electronics and precision engineering cluster, the weaker outlook is mainly due to the subdued demand for semiconductors and semiconductor-related equipment, as well as uncertainties arising from the US-China trade conflict that has broadened to the global technology sector.

Manufacturing - which makes up about one-fifth of Singapore's economy - has been roiled by uncertainties from the trade conflict, slowing demand in China, and the peaking of the semiconductor cycle in the past year.

A separate survey by the Department of Statistics (Singstat) on the services sector, also released on Wednesday, showed the business expectations of services firms have moderated for the second half of 2019.

Some 12 per cent of firms foresee slower business, while 14 per cent of firms are optimistic about business conditions. This results in a net weighted balance of 2 per cent of firms predicting a more favourable business outlook for the period of July to December 2019 - this is weaker than the 9 per cent recorded for the same period last year. It also eased from the 4 per cent seen in the previous quarter, which looked at business conditions for April to September 2019.

Within the services sector, the accommodation, food & beverages services, information & communications and transport & storage industries are among the more upbeat. Meanwhile, the retail trade, wholesale trade and financial & insurance industries are the least optimistic.