Still gloomy but business sentiment in Singapore edges up from record low on economy's reopening

Overall business sentiment continued in contractionary territory for the third quarter. ST PHOTO: TIMOTHY DAVID

SINGAPORE - Business sentiment among firms in Singapore for the third quarter of this year improved slightly from a record low due to the economy's gradual reopening, but the outlook stayed murky on all the uncertainties ahead.

While the manufacturing and financial sectors are more optimistic for the July to September period as compared with the previous three months, 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 on Tuesday (June 9).

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."

Overall business sentiment continued in contractionary territory for the third quarter at -5.16 percentage points, inching up from the previous quarter's all-time low of -7.88 percentage points.

All six indicators of the study - volume of sales, net profits, selling price, new orders, inventory levels and employment levels - reported negative numbers, the same as for the previous quarter.

On a yearly basis, 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 firms hold the most bleak outlook for the July to September period, with negative indicators across the board - saw new orders, inventory and employment levels each fall to -60 percentage points, compared with -30 percentage points the previous quarter.

The two sectors that are moderately upbeat - manufacturing and finance - both recorded three indicators in positive territory.

For the manufacturing industry, new orders recovered from -10 percentage points in 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 in the previous three months.

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

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

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