Singapore manufacturers and service companies less optimistic about next 6 months: polls


SINGAPORE – Business optimism has receded among companies in the manufacturing and service sectors amid new variants of Covid-19 and supply chain pressures.

A weighted net balance of 8% of manufacturing companies anticipates a favorable trade situation in the first six months of this year compared to the fourth quarter of 2021, according to a survey by the Economic Development Board (EDB) on Monday, January 31. .

This is down from 16% seen in the previous poll in October.

Similarly, a weighted net balance of 14% of companies in the services sector expects more favorable trading conditions for the first half of this year, down from 19% in the previous survey with its six-month outlook. month coinciding with the year -end of the holidays, said the Department of Statistics (SingStat).

The weighted net balance is used to gauge business sentiment. It measures the difference between the weighted shares of positive and negative responses.

Among manufacturers, a weighted 15% predict better business conditions, while a weighted 7% predict weaker business prospects.

The transportation engineering cluster was the most promising, with 54% of net-weighted companies expecting the operating environment to improve over the next six months to June this year.

Within the cluster, the aerospace segment continues to expect increased demand for aircraft maintenance, repair and overhaul work as more countries ease restrictions on international travel, EDB said.

Meanwhile, the land and marine and offshore engineering segments are also bullish on the business outlook as companies forecast continued recovery in global automotive, oil and gas markets despite challenges in the chain. supply.

Companies in the biomedical manufacturing sector also maintain positive sentiment, with a weighted net balance of 16% of bullish companies for the first half of 2022.

This is mainly due to the medical technology segment, where companies anticipate continued strong export demand for medical devices that are both pandemic and non-pandemic related.

In the precision engineering group, a weighted net balance of 11% of companies expect favorable business conditions to improve over the next six months.

This is led by the semiconductor equipment industry, in the machinery and systems segment, as strong global demand for chips continues to drive capital investment among global semiconductor manufacturers.

But many companies in the group, especially those in the precision modules and components segment, have expressed concerns about longer shipping times and rising costs due to supply chain bottlenecks, EDB noted.

The key electronics pole is the least optimistic, with a weighted net balance of 4% of companies anticipating a less favorable commercial situation.

The semiconductor segment expects demand to remain strong, although seasonally lower than in the previous quarter.

But companies in the other electronic modules and components segment are worried about falling export orders from China.

In the services sector, 23% of companies are optimistic about economic conditions, while 9% of companies expect economic conditions to deteriorate.

The wholesaling industry remains hopeful, with wholesalers of petroleum and petroleum products as well as machinery and equipment expecting higher demand for their products.

The information and communications industry also expects more favorable business conditions in the coming months, especially companies engaged in computer programming and consulting services, as they expect an increase in customer demand to digitize business operations, SingStat said.

Similarly, the finance and insurance sector expects business conditions to improve, in anticipation of an improvement in global economic conditions.

“Banks and companies engaged in payment processing services are among those optimistic about their business prospects,” SingStat added.

The transportation and warehousing industry also expects better trading conditions, with airline companies optimistic for the coming months.

However, companies in the real estate sector expect less favorable business conditions, especially those engaged in the rental of commercial premises who expect downward pressure on rental rates due to weaker demand. for those spaces, SingStat said.

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