Singapore local businesses are getting optimistic for Q3

According to the study, the business confidence in Singapore has reflected further signs of positivity for the second consecutive quarter.

Picture for representation
Picture for representation Reuters

It would seem like firms in Singapore are getting optimistic with their operations for the next quarter, as the business optimism index (BOI) study released by the Singapore Commercial Credit Bureau (SCCB) showed.

According to the study, the business confidence in Singapore has reflected further signs of positivity for the second consecutive quarter. The index jumped +3.58 percentage points in Q3 2017, taking off from the +2.66 percentage points increase seen for Q2 2017. On a yearly basis, the index jumped from the +1.11 percentage points seen in Q3 2017.

In terms of business indicators, four have improved on a year-on-year basis. Both outlooks for the volume of sales and net profits rose into the positive side, up +5.5 and +5.0 percentage points, respectively. Employment outlook also jumped from a flat growth last year to +4.0 percentage points in Q3 2017.

On the other hand, the outlook for selling prices and new orders rose and moderated for Q3 but remained in the contractionary side.

Amongst the sectors, the transportation emerged as the one with the most optimistic outlook for growth in six indicators. This was largely driven by the growth in the water transport segment. The optimism seen in the sector marks a reversal from the previous quarter when only 1 indicator was expansionary.

For the services sector, the slowdown in the food and beverage sector has led to the moderation of its outlook for the six indicators.

Meanwhile, it was a slow improvement for the manufacturing sector. Expansionary indicators increased from two in the previous quarter to three. This is attributed to the robust growth within the electronics and precision engineering segments.

The weakness of the private building segment has led to the softness of the sentiments within the construction sector, where only two indicators are expansionary. It was the same story in the financial sector.

Commenting on the rebound in overall business optimism for the coming quarter, SCCB's Chief Executive Officer Audrey Chia said the outlook amongst the business community has stayed relatively resilient despite the downside risks in the global economy.

"The improvements were supported mainly by the rise in optimism within the transportation and manufacturing sectors. However, we are expecting sentiments to remain lukewarm in the coming months given the pockets of weakness in both construction and financial sectors which have offset the improvements made," Chia said.

She added, "While sound economic fundamentals of our local economy could act as a floor under prevailing global uncertainties, businesses should brace themselves for the challenges brought about by the economic restructuring and proactively create new revenue streams and invest in the upskilling of employees to remain relevant in the long-term."