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Singapore firms reflect pick up in business sentiment

SINGAPORE — Overall business sentiment on the growth prospects of the Singapore economy has improved, according to two surveys on business expectations released on Friday (April 28).

Skyline of Singapore's central business district. Photo: Reuters

Skyline of Singapore's central business district. Photo: Reuters

SINGAPORE — Overall business sentiment on the growth prospects of the Singapore economy has improved, according to two surveys on business expectations released on Friday (April 28).

The Economic Development Board (EDB) found that a net weighted 7 per cent of manufacturers expect business conditions to improve over the next six months to September, compared to the first three months of 2017.

In the services sector, a net weighted balance of minus 1 per cent of firms expect less favourable business conditions over the next six months (April to September), compared with the previous six months.

This is an improvement from the net weighted balance of minus 14 per cent recorded for the January to June period, according to data from the Singapore Department of Statistics.

The findings from the two pillars of the Singapore economy - manufacturing and services - support the macroeconomic review released by the Monetary Authority of Singapore on Thursday.

The report noted that prospects for the manufacturing sector have improved, on the back of strong external demand. And while some segments in the services sector have picked up, other segments such as retail and food are expected to face headwinds as discretionary spending remains weak due to a subdued labour market, said the central bank in its biannual report.

In the latest industrial production report released by the EDB on Wednesday, manufacturing output rose 10.2 per cent in March, with the electronics cluster expanding by 37.7 per cent year-on-year. The growth was largely driven by the semiconductor segment, which posted a robust growth of 54.6 per cent.

However, employment conditions in the manufacturing sector are likely to stay subdued at minus 5 per cent from minus 16 percent previously, according to Ms Selena Ling, head of treasury research and strategy at OCBC Bank.

“As seen in (today’s) employment data, the manufacturing sector has been subtracting rather than adding to job creation in the first quarter of 2017,” she said.

Except for the general manufacturing industries, all clusters within the manufacturing sector anticipate better business prospects for the April to September period, as compared with the previous quarter.

The electronics and precision engineering clusters lead the optimism, with a net weighted balance of 16 per cent of firms in each cluster projecting favourable business conditions for the next six months.

In the electronics cluster, the semiconductor segment projects strong market demand for chips used in smart phones, with strong demand from China, the United States and Europe.

Within the services sector, meanwhile, business sentiments remain mixed. The information and communication and wholesale trade industries are among those which foresee more favourable business conditions over the next six months to September, compared to the previous six months.

On the other hand, industries such as retail trade, food and beverage services, and transport and storage services are less optimistic in their business outlook.

The employment outlook in the services industry remains muted, said Ms Ling. “The revenue outlook for the services firms were also generally more subdued, which is in line with the softer domestic labour market conditions which may in turn constrain domestic consumption.”

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