Business expectations of the manufacturing sector (business sentiments for July – December 2012)

July 31, 2012
I Business Sentiments for July – December 2012
1. Business sentiments in the manufacturing sector is expected to moderate in the next six months, compared to the second quarter of 2012.  The latest survey shows that a weighted 13 per cent of manufacturers expect business conditions to improve while a weighted 12 per cent foresee deterioration.  Overall, a net weighted balance of 1 per cent of manufacturers anticipate a more favourable business situation in the second half of 2012 compared to the second quarter of 2012.  This is weaker than the weighted balance of 15 per cent recorded in last quarter's survey.  Firms generally expressed caution over economic uncertainties in Europe and the United States, as well as the possibility of further slowdown in China. 

2. The general manufacturing cluster is the most optimistic, with a net weighted balance of 15 per cent of firms expecting better business prospects in the second half of 2012, compared to the second quarter of 2012.  Within the cluster, the other manufacturing industries segment is the most upbeat, expecting support from public sector construction activities. 

3. In the electronics cluster, a net weighted balance of 5 per cent of manufacturers predict an improved business outlook in the next six months, compared to a quarter ago.  This sentiment is significantly weaker than the weighted balance of 30 per cent recorded in the last quarter's survey.  Most electronics segments project business conditions to be weaker in the second half of 2012.  The data storage segment expects the surge in demand for hard disk drives that resulted from the supply chain disruptions in the wake of the Thailand floods, to ease in the second half of the year.  On the positive side, semiconductor firms anticipate chip orders to be sustained by strong demand for smartphones and other mobile computing devices. 

4. Majority of firms in the biomedical manufacturing and transport engineering clusters expect business conditions in the next six months to remain similar to a quarter ago.

5. A net weighted balance of 1 per cent of chemicals firms foresee a less favourable business situation in the next six months of the year, compared to a quarter ago. While falling oil prices have reduced feedstock prices, firms expect their margins to remain pressured by uncertainties in global demand.

6. The precision engineering cluster is the least upbeat, with a net weighted balance of 16 per cent of firms anticipating that business conditions will deteriorate in the next six months ending December 2012, compared to a quarter ago.  Both segments in the cluster project weaker business conditions mainly due to uncertainties in the European and US markets. 

II  Output Forecast for July – September 2012
7. A net weighted balance of 6 per cent of manufacturers expect production to increase in the third quarter of 2012, over the second half of 2012.

8. The electronics cluster is the most upbeat with a net weighted balance of 13 per cent of firms projecting a higher level of production in the third quarter of 2012, compared to the second quarter of 2012.  The semiconductor segment foresees seasonally higher output in the third quarter in preparation for the year-end holiday season.  The general manufacturing industries cluster is the next most positive, with food and beverage firms projecting higher production for upcoming festivals like the Moon Cake Festival and Hari Raya Puasa, and the year-end festive season.  The transport engineering cluster is also predicting higher output in the third quarter of 2012 compared to a quarter ago, with the marine and offshore engineering firms working to complete contracts secured earlier.

9. On the other hand, the precision engineering cluster is the least upbeat about production activity in the next three months. The machinery & systems segment expects fewer orders of machinery, while the precision modules & components segment foresees lower export demand from Europe and the US.   

III Employment Forecast for July – September 2012
10. Employment prospects in the manufacturing sector for the third quarter of 2012 are expected to remain positive. A weighted 94 per cent of manufacturers polled expects employment level in the third quarter of 2012 to increase or remain similar, compared to the second quarter of 2012. The transport engineering and the general manufacturing industries clusters are the most optimistic about employment opportunities in the three months ahead.

IV Factors Affecting Export Orders for July – September 2012
  A weighted 44 per cent of firms in the manufacturing sector reported no limiting factors that will affect their ability to obtain direct export orders in the third quarter of 2012.  The weighted 47 per cent of firms that indicated export constraints cited price competition from overseas competitors and economic and political conditions abroad as the most important limiting factors.

 

Editors' Note:  

For media enquiries, please contact 
Ms Karen Lin 
(Tel: 6832-6587 / hp: 9623-0355 / Email: karen_lin@edb.gov.sg).

For further information on the business expectation results, please contact 
Ms Leong Pui Ling 
(Tel: 6832-6737 / hp: 9877-2580 / Email: puiling@edb.gov.sg).

Updates on business expectations of the manufacturing sector for the third quarter of 2012 are available on http://www.news.gov.sg and http://www.sedb.com

Technical Notes
The Survey of Business Expectations of the Manufacturing Sector for the third quarter of 2012 was conducted between June 2012 and July 2012 by the Economic Development Board. Out of a total of 413 manufacturing establishments surveyed, 96 per cent responded. These establishments were asked to indicate their expectation of general business conditions and other indicators such as output and employment. Their views are expressed in terms of directional change (i.e. "up", "same" or "down"). Individual responses provided by the establishments are weighted by their contribution to employment and value added. These responses are then aggregated at cluster, sub-cluster and overall manufacturing level, and presented in terms of weighted percentages. The net weighted balance is commonly used to reflect the direction and extent of the business sentiments. It is the difference between the weighted percentage of 'up' responses and the weighted percentage of 'down' responses. For example, if weighted responses for overall manufacturing output yields a net weighted balance of +30 per cent, the plus sign before the percentage figure indicates a positive balance or net upward movement, and not a 30 per cent increase in output. Similarly, a minus sign before the percentage indicates a downward trend and not a decline by that amount.

About the Singapore Economic Development Board
The Singapore Economic Development Board (EDB) is the lead government agency for planning and executing strategies to enhance Singapore's position as a global business centre.  EDB dreams, designs and delivers solutions that create value for investors and companies in Singapore.  Our mission is to create for Singapore, sustainable economic growth with vibrant business and good job opportunities. EDB's 'Host to Home' strategy articulates how we are positioning Singapore for the future.  It is about extending Singapore's value proposition to businesses not just to help them improve their bottom line, but also to help them grow their top line through establishing and deepening strategic activities in Singapore to drive their business, innovation and talent objectives in Asia and globally. 

For more information on how EDB can help your business, please visit www.sedb.com

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Business expectations of the manufacturing sector
Business expectations of the manufacturing sector

31 July 2012


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