Singapore business confidence falls to near 2-year low in Q4

Singapore's business sentiment dipped from +6.91 percentage points in Q3 to +4.82 percentage points in Q4. PHOTO: ST FILE

Business confidence in Singapore has dropped to a near two-year low for the final quarter of this year, with the manufacturing sector and wholesale trade bracing themselves for a downturn, a new survey has shown.

Business sentiment fell from +6.91 percentage points in the third quarter to +4.82 percentage points in the fourth quarter, the Singapore Commercial Credit Bureau's (SCCB) Business Optimism Index showed.

Year on year, it nearly halved from the +9.19 percentage points in the fourth quarter last year. Five of six indicators were lower in the fourth quarter this year than in the previous quarter.

The figures were derived from a poll of 200 business owners and senior executives representing major industry sectors across Singapore, and are calculated by subtracting the percentage of respondents expecting decreases from that of those expecting increases, said the SCCB in a report yesterday.

Compared with the previous quarter, sales, profits, new orders, employment and inventory levels fell.

Only selling price - which remained negative - saw some improvement, going up from -7.32 percentage points to -3.33 percentage points. This was the direct opposite of the previous quarter, when all indicators, except selling price, rose.

On a year-ago basis, only employment rose, jumping from +4.39 percentage points to +14.44 percentage points.

Sector-wise, the financial industry was the most optimistic, with five indicators in positive territory, versus the previous quarter. The only exception was selling price, which still rebounded from -20 percentage points to 0 percentage point.

Five indicators rose for transport, but three - sales, net profits and inventory levels - came in at 0 percentage point, while the remaining three were positive.

Three indicators were positive for construction, while selling price fell from +20 percentage points to 0 percentage point. Inventory levels and new orders remained negative. Net profits rebounded from -20 percentage points to +50 percentage points, while volume of sales rose from +20 percentage points to +50 percentage points. Employment levels remained upbeat at +20 percentage points.

Manufacturing and wholesale trade were the most downbeat. Manufacturing had employment as its sole positive indicator and wholesale trade had none.

The less positive sentiment followed last month's move by the Trade and Industry Ministry to lower Singapore's economic growth forecast for this year to 0 per cent to 1 per cent, from 1.5 per cent to 3.5 per cent.

SCCB chief executive Audrey Chia said: "Most sectors are experiencing a downturn for the final quarter of 2019, most noticeably the manufacturing and wholesale trade sectors. This is largely due to trade tensions affecting international supply chains, shrinking imports from China and a generally muted global outlook. This has led to negative spillover effects on the vulnerable trade-related sectors."

Despite the moderated outlook, she said, the SCCB still sees "signs of green shoots" in sectors such as construction, transport and services, where growth is expected to sustain for the rest of the year.

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A version of this article appeared in the print edition of The Straits Times on September 17, 2019, with the headline Singapore business confidence falls to near 2-year low in Q4. Subscribe