Manufacturers more upbeat on 1st-half outlook

Optimism in the semiconductor industry gave a positive flip to manufacturers’ outlook of business conditions in the first half of this year.

A weighted 19 per cent of manufacturing establishments expect business prospects to improve, outnumbering by 12 percentage points those with a softer view, according to the latest quarterly survey by the Economic Development Board (EDB).

This contrasts with the net weighted balance of 5 per cent anticipating a less favourable situation in the previous quarterly survey.

The electronics cluster was the most optimistic, with a net weighted balance of 23 per cent expecting an improved operating environment.

“The positive outlook is largely attributed to the semiconductor segment, which expects demand to improve on the back of the roll-out of 5G technology, as well as expectations that the US-China trade conflict is unlikely to deteriorate further,” according to an EDB statement yesterday.

Mr Irvin Seah, senior economist at DBS Bank, said that while the survey was probably conducted prior to the virus outbreak in China, the impact of the disruption has not been much on manufacturing.

“Though we won’t discount some easing in manufacturing sentiment going forward, the net weighted balance will be less affected than that of the services sector,” he said.

Mr Seah expects further improvement in the semiconductor industry’s prospects on the back of a global upcycle in demand for electronic goods.

In the transport engineering cluster, a net weighted balance of 15 per cent of firms foresee better business prospects.

Within the cluster, the food, beverages and tobacco segment expects seasonally weaker orders in the first quarter of the year, while the printing segment anticipates increased digital adoption to continually weigh on demand for print jobs.

A net balance of 3 per cent of manufacturers plan to hire fewer workers in the next three months.

  • 14%

    Percentage of services firms that have turned pessimistic on the first half of this year and see slower business, according to a survey by the Department of Statistics on the services sector released yesterday. Just 12 per cent are optimistic about business conditions.

A separate survey by the Department of Statistics on the services sector released yesterday, showed services firms have turned pessimistic on the first half of this year.

Some 14 per cent see slower business, while 12 per cent are optimistic about business conditions.

While the findings are weaker than the outlook for the October 2019-March 2020 period, they represent an improvement over the results in the same period last year.

Within the services sector, the financial and insurance, information and communications, and personal services industries see favourable conditions.

The accommodation, retail trade, and food and beverage services are less optimistic.

Real estate firms mainly engaged in the management of residential, commercial and industrial properties expect to increase hiring in the first quarter. Recreation, community and personal services also see higher employment opportunities, especially in childcare services.

However, accommodation and food and beverage services expect to hire fewer people.

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