Global trade tensions and the property cooling measures here have hit business sentiment in the manufacturing and services sectors, according to two reports out yesterday.
One found that a net weighted balance of 3 per cent of services sector firms expect the business situation to improve in the period to next March compared with the previous six months. This is down from 9 per cent in both the third quarter and the same period a year ago.
The net weighted balance is the difference between the proportion of optimistic and pessimistic firms polled by the Economic Development Board (EDB) and the Department of Statistics.
The mood has turned even gloomier in the manufacturing sector, with most companies expecting conditions in the next six months to worsen - a reverse of the positive trend in recent surveys. Maybank Kim Eng senior economist Chua Hak Bin said: "Expectations have taken a turn for the worse, led especially by electronics and precision engineering."
Singapore last week reported a surprise 0.2 per cent decline in September factory output.
The potential for a slowdown extends to the services sector, added Dr Chua, noting that trade tensions could also affect industries such as wholesale trade and finance.
The EDB singled out two kinds of manufacturers as markedly gloomy: the machinery and systems segment in the precision engineering cluster, and infocomms and consumer electronics firms. Both anticipate weaker orders amid growing trade concerns.
But the transport engineering cluster stood out for being the most optimistic, while oil and gas equipment makers are crossing their fingers for more orders as crude prices improve and shipyards and aerospace companies are looking to pick up more repair work.
Biomedical manufacturing also bucked the downward trend as export orders are expected to stay strong.
All industries within the services sector believe conditions will either improve or stay the same in the next six months - except the real estate industry in the wake of July's cooling measures.
Firms in the food and beverage services, retail trade and accommodation industries all expect better prospects, lifted by the year-end holidays and festivities such as Christmas and Chinese New Year.
Computer programming and consultancy firms, as well as Web portal service providers, are also looking forward to higher demand. So are firms in the recreation, community and personal services industry - especially healthcare providers - but optimism was more muted in transport and storage.
Wholesale trade and non-real estate business services were both mildly upbeat, while the financial and insurance segment leaned towards tepid optimism.
United Overseas Bank senior economist Alvin Liew noted that the mood in the services sector is still positive but "we still have to focus on the outlook for those services segments that are trade-related. It could get worse if the US-China trade spat escalates further".
Domestic-oriented industries could also feel the effects of a China slowdown, such as a hit to receipts from fewer tourists, he added.
He said: "I think we need to first get through this year before we can say for certain that things will get worse. By that, we mean the US midterm elections in early November and then the meeting between the US and China presidents at the G-20 leaders summit."
Still, he added: "The broad consensus, including ours, is that there will be a weaker growth outlook in 2019... How weak it will get is actually still the big question."
