Singapore manufacturers stay gloomy while services sector less upbeat

SINGAPORE – For the third straight quarter, Singapore manufacturers remain pessimistic about business in the next six months, while positive sentiment in the services sector has moderated, according to separate quarterly survey reports released on Tuesday.

A net weighted balance of 25 per cent of manufacturers expect a less favourable business situation from January to June 2023, worsening from the previous quarterly survey, where 20 per cent are pessimistic, according to the latest release from the Economic Development Board (EDB).

For services firms, a net weighted balance of 3 per cent of them are optimistic, down from 9 per cent previously, a similar survey by the Department of Statistics (Singstat) found.

The net weighted balance is the difference between the weighted shares of positive and negative responses, with a positive figure indicating more optimism than pessimism.

Among manufacturers, a weighted 6 per cent of them expect improved conditions ahead, while 31 per cent expect conditions to worsen.

All but one manufacturing cluster is pessimistic about business conditions in the next six months with electronics the most downbeat, followed by biomedical manufacturing, general manufacturing, precision engineering and chemicals.

The current downcycle in the global semiconductor industry was cited as one reason for the pessimism in electronics, while the recent curbs on technology exports to China by the United States could weigh on orders for chipmaking equipment.

Bucking the trend, transport engineering has a net weighted balance of 21 per cent of manufacturers expecting the business outlook to improve in the half-year.

The aerospace segment (43 per cent), which expects higher demand for aircraft maintenance, repair and overhaul (MRO) jobs as cross-border air travel continues to recover, leads the optimism, EDB said.

Similarly, the marine and offshore engineering segment (11 per cent) is positive in view of the continued pick-up in global oil and gas activities and more ship-repair jobs as well as offshore conversion projects secured.

Manufacturers in the land segment (-22 per cent) are pessimistic, however.

In terms of hiring, the majority of firms expect employment level in the first quarter of 2023 to remain similar to the fourth quarter of 2022, EDB said.

Overall, a net weighted balance of 3 per cent of manufacturers expect a decline in hiring activities for the first three months of the year, compared to the previous quarter. In particular, the electronics (-25 per cent) and precision engineering (-6 per cent) clusters are the least optimistic in their employment outlook.