S’pore’s manufacturing and services sectors show cautious optimism amid global uncertainties
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A net weighted balance of 6 per cent of manufacturing firms anticipate an improved business situation for the period July to December 2023.
PHOTO: ST FILE
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SINGAPORE – Businesses in Singapore’s manufacturing and services sectors remain cautiously optimistic even amid macroeconomic and geopolitical uncertainties, according to separate quarterly survey reports released on Monday.
A net weighted balance of 6 per cent of manufacturing firms anticipate an improved business situation for the period July to December 2023, compared with the second quarter of 2023,
For service companies, a net weighted balance of 8 per cent of firms are expecting a more favourable business outlook, a similar survey by the Department of Statistics (SingStat) found.
The net weighted balance is the difference between the weighted shares of positive and negative responses, with a positive figure indicating more optimism than pessimism.
Among manufacturing firms, the transport engineering cluster remains the most optimistic, with a net weighted 43 per cent of firms expecting an improved operating environment in the second half of 2023.
This positive sentiment is led by the aerospace segment, which expects sustained demand for aircraft maintenance, repair and overhaul jobs amid consistent demand for air travel.
Firms in the marine and offshore engineering segment continue to expect more orders from the oil and gas, and renewable energy industries.
Meanwhile, the general manufacturing sector, biomedical manufacturing cluster and chemicals cluster are pessimistic about business conditions in the second half of 2023.
A net weighted 25 per cent of firms in the biomedical manufacturing cluster expect output to decrease in the third quarter of 2023, compared with the second quarter of 2023.
This is due to expectations that production of Covid-19-related products, as well as demand for life science instruments and consumables, will soften amid the uncertain macroeconomic situation.
Meanwhile, a net weighted balance of 11 per cent of firms in the electronics cluster project business conditions to improve for the period July to December 2023, compared with the second quarter of 2023.
This optimism is led by the semiconductors segment, where ongoing adjustments in customers’ inventories are expected to improve the supply-demand imbalance and drive demand growth.
The precision engineering cluster continues to be adversely affected by the slowdown in global electronics demand. However, a net weighted balance of 7 per cent of firms in the cluster predict business conditions to improve in the next six months ending December 2023.
This slight optimism is largely driven by the machinery and systems segment, where some firms, such as those supporting the marine and offshore industry, expect higher orders.
In terms of hiring, a net weighted balance of 4 per cent of manufacturers expect an increase in hiring activities for the third quarter of 2023 than in the previous quarter.
Among the manufacturing clusters, the transport engineering cluster is the most optimistic in its employment outlook, while electronics and precision engineering clusters are the least optimistic.
In the service industry, 19 per cent of firms are upbeat about the business conditions, while 11 per cent of firms foresee deteriorating business conditions.
The most positive segments are accommodation, followed by food and beverage service, then professional services, together with transportation and storage.
However, companies in the wholesale trade are less optimistic about their business prospects in the second half of 2023.
“Wholesalers expect the challenging macroeconomic landscape to dampen demand. In particular, wholesalers of computers, computer peripheral equipment and software attribute their negative sentiments to weak demand for computers,” SingStat said.
With a net weighted balance of 10 per cent of firms, the services sector foresees higher revenue for the July to September 2023 period.
On employment, the majority of the industries expect to increase their hiring activities for the period.
“For July to September 2023, firms within the accommodation industry expect to increase hiring in tandem with the projected increase in tourist arrivals,” SingStat said.
“Similarly, firms within the recreation, community and personal services industry expect employment levels to increase, in line with their positive revenue outlook for July to September 2023.”
