SINGAPORE (Oct 31): More firms in Singapore’s manufacturing sector are predicting a less favourable business outlook in the next six months compared to 3Q19, according to a survey by the Economic Development Board (EDB).
While the majority of firms in the manufacturing sector expect business conditions for the period from October 2019 to March 2020 to remain similar to a quarter ago, a net weighted balance of 5% of manufacturers predicted a less favourable business situation.
The net weighted balance – the difference between the weighted percentage of “up” responses and the weighted percentage of “down” responses – is commonly used to reflect the direction and extent of the business sentiments.
The electronics and general manufacturing industries, as well as the precision engineering and chemicals clusters, were found to be the least optimistic about the operating environment in the next six months.
The chemicals cluster is the most pessimistic about business prospects, as firms within the cluster remain concerned about weak refining margins and cite softer orders for mineral oil additives and fragrances from the region.
In the electronics and precision engineering clusters, the weaker outlook is mainly due to the subdued demand for semiconductors and semiconductor-related equipment, as well as concerns about the US-China technology conflict.
Within the general manufacturing industries cluster, the food, beverages and tobacco segment is more cautious about orders, despite the traditionally higher demand due to the festivities in the months ahead.
Meanwhile, the biomedical manufacturing cluster was the most optimistic, with a net weighted balance of 10% of firms expecting improved business conditions for the next six months.
The optimism is mainly attributed to the pharmaceuticals segment, which anticipates higher export demand for biological products.
Output expected to decrease in 4Q
Compared to 3Q19, a net weighted balance of 2% of manufacturers also expect output to decrease in 4Q19.
The decline is led by lower forecasts in the general manufacturing industries and chemicals clusters.
The weaker production outlook for the general manufacturing industries cluster is largely due to the food, beverages and tobacco segment, which projects a lower output level in view of softer demand and scheduled maintenance shutdowns.
Within the chemicals cluster, firms in the petrochemicals and specialties segments expect output to fall as a result of scheduled plant maintenance and weaker demand from the region, respectively.
Meanwhile, the transport engineering cluster is the most optimistic, with a net weighted balance of 20% of firms expecting a higher level of activity in 4Q19.
The increase is driven by the marine and offshore engineering segment, which anticipates higher production of oil and gas-field equipment and an increase in ship repairing work.
Meanwhile, the aerospace segment projects an increase in aircraft engine repairs for commercial airlines and the land segment foresees higher output of automotive parts.
At the same time, a net weighted balance of 16% of firms in the biomedical manufacturing cluster expect output to increase in 4Q19, on the back of a projected increase in production of active pharmaceutical ingredients and biological products.
Overall, a net weighted balance of 3% of firms in the manufacturing sector – especially the electronics and precision engineering clusters – also expect to hire fewer workers in 4Q19.
