SINGAPORE – Singapore manufacturers became more pessimistic about business prospects, while industries in the service sector were overall less upbeat, according to separate surveys released on Monday.
For manufacturers, the gloom deepened as companies continued to face supply chain challenges and operational cost pressures amid Russia’s ongoing war with Ukraine and Covid-19 measures in China, according to the Economic Development Board (EDB) in its quarterly report.
These factors, together with weaker macroeconomic conditions, have weighed on demand, it said.
Overall, a net weighted balance of 20 per cent of manufacturing firms were gloomy about the business outlook for the next six months, from October to March 2023, compared with 8 per cent in the previous quarterly survey.
The net weighted balance, used to gauge business sentiment, is the difference between the weighted shares of positive and negative responses.
All clusters within the manufacturing sector, except transport engineering, aerospace and land transport, were bearish in their outlook.
The electronics cluster was the most pessimistic, with a net weighted balance of 37 per cent of firms expecting a worse half-year ahead. Within the cluster, firms in the semiconductors segment and computer peripherals and data storage segment were concerned about a rapid softening in consumer demand, especially from the personal computer and smartphone markets.
The precision engineering cluster’s business outlook turned negative with the deterioration in economic climate and continuous rise in cost of operations. A net weighted balance of 26 per cent of such firms were negative in outlook, led mainly by the machinery and systems segment.
This negative sentiment was shared by the biomedical manufacturing cluster and the chemicals cluster, where firms expected supply chain constraints and higher operating costs to weigh on their businesses.
In the general manufacturing cluster, a net weighted balance of 4 per cent of firms saw business weakening. Printing firms foresaw more orders as business events and exhibitions picked up, but those in the food, beverage and tobacco business were gloomy over rising operating costs of energy and raw materials.
In contrast, the transport engineering cluster was the most optimistic, with a net weighted 36 per cent of firms expecting better business conditions.
This optimism was led by the aerospace segment, which expected higher demand for aircraft maintenance, repair and overhaul work on the back of increased air travel following the relaxation of travel restrictions in many countries.
As for output, a net weighted balance of 17 per cent of manufacturers expected production to drop in the fourth quarter of 2022 from the previous quarter. Only the transport engineering and general manufacturing clusters projected higher output, while the rest saw production falling.
A net weighted balance of 6 per cent of manufacturers expected hiring to increase for the fourth quarter of 2022, compared with the previous quarter.
In particular, the transport engineering, general manufacturing industries, precision engineering and chemicals clusters expected to hire more workers.
The service sector, meanwhile, saw a net weighted balance of 9 per cent of firms predicting more favourable conditions in the next six months, according to the Department of Statistics survey – down from 15 per cent in its previous quarterly poll.
While most industries within the sector expected business to pick up, the wholesale trade and real estate industries forecast dimmer business conditions ahead, due to declining demand for computers for the former, and the impact of curbs and rising interest rates for the latter.
However, the retail trade and food and beverage service industries expected business to pick up for the next six months, which coincide with the year-end festive season. Retailers of wearing apparel and footwear and restaurants were among those that expected better business during this period.
The recreation, community and personal services industry also expected business to improve in the next six months. Higher education institutions foresaw more foreign students with borders reopening.
As a whole, the service industries expected a rise in hiring activity for October to December.