Singapore business sentiment improves slightly for Q4 but construction, transportation stay gloomy: Survey

SINGAPORE – Local companies’ business confidence improved further for the fourth quarter amid resilient demand and a positive outlook for manufacturing and the financial services sectors, according to a survey out on Tuesday (Sept 14).

However, the outlook for the construction and transportation sectors remained downbeat.

The overall Business Optimism Index (BOI) rose to +5.78 percentage points for the October to December period, said the Singapore Commercial Credit Bureau (SCCB), a subsidiary of Credit Bureau Asia that compiles the index every quarter.

The BOI was up from +4.07 percentage points in the third quarter and +3.94 percentage points in the second quarter, when the index climbed into the expansionary zone after staying contractionary for four straight quarters.

Compared to a year ago, the index has rebounded from -4.97 percentage points for the fourth quarter of 2020.

Ms Audrey Chia, SCCB’s chief executive officer, said that while the increased optimism for the fourth quarter is due largely to the relatively resilient demand in manufacturing and the financial services sectors, significant downside risks remain as the local economy is stillexposed to the lingering uncertainties of the Covid-19 pandemic both domestically and globally.

“The recent regulatory developments in China and geopolitical uncertainties have also weighed on the overall sentiments,” she said, referring to China’s multi-pronged crackdown on a broad range of industries, leaving start-ups and decades-old firms alike operating in a new, uncertain regulatory environment.

SCCB’s index measures business sentiment in the economy by tracking six parameters: volume of sales, net profit, selling price, new orders, inventory levels and employee count.

SCCB said four of the indicators improved from the previous quarter, compared to three indicators in the last quarterly survey.

Volume of sales moderated slightly to +7.52 percentage points in the fourth quarter from +7.63 percentage points in the previous three months, while selling price fell to nil from +2.29 percentage points.

Net profit rose to +9.63 percentage points from +7.63 percentage points. New orders increased to +10.69 percentage points from +9.92 percentage points, inventory levels inched up to -5.35 percentage points from -6.11 percentage points and employment levels jumped to +12.12 percentage points from +3.05 percentage points.

On a year on year basis, all six indicators improved.

Volume of sales rebounded to +7.52 percentage points from -1.11 percentage points, net profit rebounded to +9.63 from -5.56, selling price jumped to nil from -17.78, new orders increased to +10.69 from +8.89, inventory levels rose to -5.35 from -8.70 and employment levels increased to +12.12 from -13.19.

All the six indicators were in positive territory for the financial and manufacturing sectors. Meanwhile, sentiments within the wholesale sector remained upbeat with five of six indicators in the positive zone.

The outlook for the services sector improved slightly with four of six indicators in positive territory, as compared to two indicators in the third quarter.

Sentiments within the construction sector also improved slightly, although it has remained largely downbeat with three indicators – sales, net profit and inventory – stuck in the contractionary zone.

Sentiments within the transportation sector remained weak with one of six indicators in the negative territory.

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