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Services sector turnover rises in Q4 but economists cautious on outlook

SINGAPORE — The turnover of the services industries, excluding wholesale and retail trade as well as accommodation and food services, rose 0.5 per cent in the fourth quarter of 2016 from the corresponding period a year earlier, data from the Department of Statistics Singapore (Singstat) showed yesterday, but economists remained cautious in their outlook for the sector.

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SINGAPORE — The turnover of the services industries, excluding wholesale and retail trade as well as accommodation and food services, rose 0.5 per cent in the fourth quarter of 2016 from the corresponding period a year earlier, data from the Department of Statistics Singapore (Singstat) showed yesterday, but economists remained cautious in their outlook for the sector.

The year-on-year increase was led by the education, health and social services as well as the information and communications services segments that rose 7.1 per cent, 7 per cent and 2.6 per cent, respectively.

However, the recreation and personal services and the transport and storage services industries reported declines of 3.7 and 1.8 per cent in turnover, respectively. The financial and insurance segment as well as the business services segment were little changed.

“The services sector growth continues to be slow and uneven with selective hiring by businesses, largely in areas including IT security, compliance, healthcare besides professional consultancies. While households continue to be careful about spending in general, parents are willing to spend more on children’s education ... Broadly speaking, an uptick in regional and global growth fuelling the export of a larger range of products is key to Singapore’s overall gross domestic product growth,” said CIMB economist Song Seng Wun.

The services sector accounts for about two-thirds of the Republic’s economy, which in the final quarter of last year expanded at a faster-than-expected 2.9 per cent from the year-ago period, data from the Ministry of Trade and Industry showed earlier this month.

While the manufacturing sector grew 11.5 per cent, led by the robust growth in the electronics and biomedical manufacturing clusters, the services sector expanded by 1 per cent, fuelled mainly by segments such as transportation and storage as well as information and communications.

“The domestic side of the services sector continues to be weak and we have yet to see signs of corporate profits picking up and spilling over into hiring. On the external front, though it has been strong in the last quarter of 2016, here on and ahead in the second half of the year, it could turn slow if China continues to be weak and if United States President Donald Trump is not able to push through the tax cuts and infrastructure spending,” said Credit Suisse economist Michael Wan.

On a sequential basis, turnover of the services industries, excluding wholesale and retail trade as well as the accommodation and food services, rose 3.6 per cent in the fourth quarter of 2016 from the third quarter.

All services industries performed well, except for education services as well as the recreation and personal services segments, the Singstat data showed.

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