SINGAPORE - Manufacturing and services firms are negative on business prospects for the next six months, amid the Covid-19 pandemic which has cast a pall over the global economy.
Their bleak sentiments were noted in two surveys released by the Economic Development Board (EDB) for the manufacturing sector and the Department of Statistics (Singstat) for services on Thursday (April 30).
All industries within the services sector expect business activity to deteriorate for the period between April and September, as compared to the preceding half-year period, with a net weighted balance of 58 per cent of firms predicting worse conditions.
The accommodation, food & beverage (F&B) services and retail trade industries are most affected by the Covid-19 pandemic, and were most negative on prospects for the upcoming months.
As a whole, the services industries expect to reduce hiring for the three months ending June, compared to the first three months of the year.
Firms in the accommodation and retail industries expect to decrease hiring in second quarter in view of lower level of business activity during the circuit breaker period. The F&B sector also predicts a fall in employment due to dine-in restrictions.
The overall services sector also expects operating receipts to decrease in the second quarter of 2020, compared with the first three months of the year.
The manufacturing sector turned bearish compared to the last quarterly survey, with a net weighted balance of 56 per cent of firms foreseeing a weaker business outlook from April to September, as compared to the first three months of this year.
All clusters within the manufacturing sector expect a softer operating environment for the upcoming half-year, given the weakened external demand and supply chain disruptions due to global containment measures.
The transport engineering cluster was the most pessimistic, with a net weighted balance of 79 per cent of firms expecting a dampened half-year ahead.
A majority of firms expect employment levels in the three months from April to June to remain similar to the first three months of the year. Among the manufacturing clusters, all clusters except the electronics cluster project a smaller workforce in the second quarter of 2020.
A net weighted balance of 32 per cent of manufacturers expect output to decrease from April to June, compared with the first three months of the year. All clusters project lower output levels in the these three months, primarily due to global containment measures.
The top two limiting factors which firms said would affect their ability to obtain export orders in the second quarter of this year are the Covid-19 pandemic and global political or economic conditions, such as lingering risk of United States-China trade tensions.
Planned investments among firms for the next 12 months are largely for the replacement of worn-out equipment and installation of new production technology.
In a statement on Thursday, the Ministry for Trade and Industry (MTI) said that it is “not surprising that many businesses surveyed are pessimistic about their near-term outlook” given that global coronavirus containment measures have affected many firms, especially those in consumer-facing segments.
The circuit breaker measures, despite their impact on Singapore’s economy, are needed to fight the outbreak, it noted.
MTI pointed out that Singapore’s economic fundamentals remain strong despite the challenges of the Covid-19 pandemic, and added that measures can gradually be eased if community transmissions are reduced.
“As long as employers, workers and the Government work closely together, we are confident that our businesses and workers will be able to adapt and emerge stronger, just as we had done in previous crises,” the ministry said.