Singapore business sentiment picks up from Q2 low

The construction sector has the bleakest outlook for the third quarter in the Singapore Commercial Credit Bureau's latest survey. ST PHOTO: KUA CHEE SIONG
The construction sector has the bleakest outlook for the third quarter in the Singapore Commercial Credit Bureau's latest survey. ST PHOTO: KUA CHEE SIONG

Business sentiment among companies in Singapore on what their positions will be in the third quarter of this year improved slightly from their record-low sentiments about the second quarter, on the back of the economy's gradual reopening, but their outlook remains murky on uncertainties ahead.

While the manufacturing and financial sectors are more optimistic for the July-to-September period than for the April-to-June period, other industries such as construction and services remain downbeat for the coming months, according to the Singapore Commercial Credit Bureau's (SCCB) latest quarterly survey, released yesterday.

SCCB chief executive Audrey Chia said: "While it is still too early to ascertain if a V-shaped recovery can be expected, there are some signs of green shoots in certain sectors such as manufacturing, professional and IT services."

Forecasts for the overall business landscape for the third quarter remained in contraction territory at minus 5.16 percentage points, a modest improvement from the all-time-low forecast of minus 7.88 percentage points for the second quarter.

All six indicators of the study - volume of sales, net profits, selling price, new orders, inventory levels and employment levels - reported negative numbers, which was also the case for the second quarter.

The index fell 12.07 percentage points from the 6.91 percentage points in the same period last year.

The quarterly Business Optimism Index study polled 200 business owners and senior executives representing major industry sectors across Singapore. The figures are calculated by subtracting the percentage of respondents expecting decreases from the percentage expecting increases.

The construction sector - where businesses hold the bleakest outlook for July to September, with negative indicators across the board - saw new orders, inventory levels and employment levels each falling to minus 60 percentage points, compared with minus 30 percentage points for the second quarter.

The two sectors that are moderately upbeat - manufacturing and finance - both recorded upticks across all those three indicators.

For the manufacturing industry, the outlook for new orders recovered from minus 10 percentage points for the second quarter to 5.88 percentage points for the July-to-September period.

The financial sector saw a similar rebound for new orders, coming in at 66.67 percentage points for the third quarter compared with 0 percentage point for April to June.

While there is some optimism among businesses as the Singapore economy gradually reopens after the circuit breaker period, high levels of uncertainty remain, given the threat of a second wave of coronavirus infections, continued global social unrest, and trade tensions between the United States and China, said Ms Chia.

With companies expected to take some time to return to operating at full capacity, as they did before the Covid-19 pandemic, the overall sentiment is forecast to remain dampened for the coming months, she added.

A version of this article appeared in the print edition of The Straits Times on June 10, 2020, with the headline 'S'pore business sentiment picks up from Q2 low'. Subscribe