The manufacturing sector expects business conditions to remain weak amid economic uncertainty arising from the Covid-19 pandemic, global macro conditions and tensions between the US and China, says EDB Singapore on Oct 30.
A weighted 18% of manufacturers anticipate improvements on the operating environment while a weighted 21% foresee a weaker outlook.
Overall, a net weighted balance of 3% of manufacturers predict a less favourable business situation for the six-month period from October 2020 to March 2021, compared to the third quarter in 2020.
Within the manufacturing sector, firms are generally positive on operating conditions in the next six months with the exception of firms in the electronics cluster, where a net weighted balance of 16% of firms anticipate less favourable business prospects.
Within the cluster, firms in the semiconductors segment foresee seasonally weaker chip demand amid elevated risks such as Covid-19 and US-China tensions. The other electronic modules and components segment expects more orders from the 5G market in the months ahead.
Among the clusters expecting favourable business conditions, about 12% of firms in the general manufacturing industries are positive that business conditions may pick up in the next six months.
The sentiment is largely led by the miscellaneous industries segment, as it expects higher demand for construction-related materials as local construction activities have gradually restarted.
A net weighted balance of 9% of firms in the biomedical manufacturing cluster foresee a favourable operating environment, led by the medical technology segment which expects export orders to increase following the re-opening of its export markets.
In the transport engineering cluster, some 4% of firms expect better business prospects. The land segment anticipates higher export demand for automotive parts while the marine and offshore engineering segment expects an improved business situation with more foreign workers living in dormitories returning to work.
The aerospace segment continues to foresee challenging business conditions in the months ahead amid Covid-19.
For the 4Q2020 from October to December, 66% of firms in the manufacturing sector expect output to remain stable quarter-on-quarter.
The precision engineering cluster is the most optimistic with 34% of firms projecting an increase in output within the next three months.
In the general manufacturing industries cluster, 4% of firms predict a higher level of production in 4Q2020 compared to 3Q2020.
On the other hand, the printing and food, beverages and tobacco segments expect lower output as orders have been negatively impacted by Covid-19.
About 16% of the biomedical manufacturing cluster expect lower production levels for 4Q2020, the most pessimistic cluster of the lot. This is led by the pharmaceuticals segment projecting a fall in production due to a different product-mix.
Majority of firms (82%) expect employment levels in the manufacturing sector to remain similar to that of the previous quarter. Overall, 8% of firms plan to hire fewer workers in the next three months. All manufacturing clusters save for the electronics and biomedical manufacturing clusters project a smaller workforce from October to December 2020.
