I.   Business Sentiments for April - September 2009

1. Fewer companies in the manufacturing sector expect deterioration in the business situation for the period from April to September 2009, as compared to the survey conducted a quarter ago. A weighted 40 per cent of companies foresee worse business conditions over the next six months, as compared with 63 per cent a quarter ago. Meanwhile, a weighted 7 per cent of firms predict an improvement in the business situation, while a weighted 53 per cent expect the situation to remain the same. Overall, a net weighted balance of 33 per cent of manufacturers anticipate a less favorable business environment over the next six months ending September 2009 compared with the first quarter of 2009.

2. Within the manufacturing sector, a significantly lower weighted per cent of firms in the electronics, chemicals, precision engineering and general manufacturing industries clusters expect deterioration in business conditions compared to a quarter ago. In the electronics cluster, the data storage and electronic modules & components segments expect some slight improvement in sales and orders for the next six months as compared to the first quarter.

3. Among the areas where the outlook has dipped include the transport engineering and biomedical manufacturing clusters. In the transport engineering cluster, the marine & offshore engineering segment foresees new orders to be impacted by sluggish crude oil prices, credit availability, and the slowdown in global seaborne trade. The aerospace segment also expects the slowdown in the aviation industry to have a negative effect on demand for maintenance, repair and overhaul (MRO) activities. In the biomedical manufacturing cluster, the pharmaceutical segment is concerned about competition from generics and the medical technology segment foresees weaker export orders for the period from April to September 2009.

II.   Output Forecast for April - June 2009

4. A net weighted 15 per cent of manufacturers expect output to decline in the second quarter of 2009 as compared to the first quarter.

5. The biomedical manufacturing cluster projects higher output in the second quarter of 2009, in anticipation of a different mix of active pharmaceutical ingredients to be produced. The rest of the clusters are less upbeat about production activities in the next three months as there are no clear signals of a turnaround in the global economy.

III.  Employment Forecast for April - June 2009

6. While a weighted 71 per cent of manufacturers expect employment in the second quarter of 2009 to remain similar to the first quarter of 2009, a weighted 3 per cent foresee an increase and a weighted 26 per cent project a decline. Overall, a net weighted 23 percent of companies plan to reduce headcount. Within the manufacturing sector, the electronics and precision engineering clusters are the least optimistic about employment opportunities in the three months ahead.

IV.  Factors Affecting Export Orders for April - June 2009

7. A weighted 42 per cent of firms in the manufacturing sector reported no limiting factors that will affect their ability to obtain direct export orders in the second quarter of 2009. Of the weighted 50 per cent that indicated export constraints, a weighted 26 per cent of the firms ranked political/economic conditions as the most important constraint.

V.   Investment Plans for April 2009 – March 2010

8. Despite the current economic climate, a weighted 64 per cent of manufacturers plan to continue investing in plant and machinery in the next twelve months (April 2009 - March 2010). These investments are for replacement of worn out equipment and production of new products. Of the weighted 64 per cent that plans to invest, 24 per cent expects higher or similar level of capital expenditure in the twelve months ahead compared to April 2008 - March 2009.

Editors' Note:  

For further information on the business expectation results, please contact

Mr Goh Chun Kiat (Tel: 6832-6344 / hp: 8448-5035 / Email: chun_kiat_goh@edb.gov.sg).

For media enquiries, please contact

Mr Alex Tan (Tel: 6832-6284 / hp: 9841-0392 / Email: alex_tan@edb.gov.sg).

Updates on business expectations of the manufacturing sector for the second quarter of 2009 are available on http://www.sprinter.gov.sg and http://www.sedb.com

Technical Notes

The Survey of Business Expectations of the Manufacturing Sector for the second quarter of 2009 was conducted in March to early April 2009 by the Singapore Economic Development Board. Out of a total of about 400 manufacturing establishments surveyed, 95 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

EDB is the lead government agency responsible for planning and executing strategies to enhance Singapore’s position as a global business centre and grow the Singapore economy. We dream, design and deliver solutions that create value for investors and companies in Singapore. In so doing, we attract economic opportunities and jobs for the people of Singapore and help shape our country’s economic future.

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