I Business Sentiments for October 2009 – March 2010

1. Business sentiments in the manufacturing sector have improved for the period October 2009 to March 2010. The latest survey shows a weighted 22 per cent of firms expecting business conditions to improve and a weighted 13 per cent predicting deterioration. Overall, a net weighted balance of 9 per cent of manufacturers anticipate a more favorable business situation in the next six months ending March 2010 as compared to the third quarter of 2009.

2. Almost all clusters expect an improved business environment over the next six months as the global economy show signs of recovery. The electronics cluster is the most optimistic, with a net weighted balance of 22 per cent of firms expecting business conditions to improve. This is followed by the general manufacturing industries, where a net weighted balance of 20 per cent of firms foresees better business conditions ahead. Business expectations for the precision engineering and chemical clusters have turned positive for the first time since the onset of the financial crisis last year. However, the chemicals cluster is still concerned about excess supply of petrochemicals and petroleum refined products in the region.

3. The transport engineering cluster is the least upbeat about business conditions for the period October 2009 to March 2010 as compared to a quarter ago. Nevertheless, the marine & offshore and land segments foresee some improvement in orders over the next three months, on the back of higher oil prices and global economic recovery.  The aerospace segment, on the other hand, does not expect an upswing in the coming months, with a net weighted balance of 80 per cent of firms expecting business situation to remain similar to a quarter ago.

II Output Forecast for October - December 2009

4. Despite an improvement in business sentiments in the next six months, a net weighted 3 per cent of manufacturers expect output to decline in the fourth quarter of 2009, as compared to the third quarter of 2009.

5. Both the electronics and precision engineering clusters project higher output for the fourth quarter of 2009 as order intake increases. The general manufacturing industries cluster expects output to remain unchanged while the remaining clusters expect output to drop during October to December 2009. The chemicals cluster projects lower production in view of maintenance shutdown, intense competition and seasonal factors; and the biomedical manufacturing cluster forecasts lower output due to a different pharmaceutical-mix.

III Employment Forecast for October - December 2009

6. Employment outlook in the manufacturing sector is expected to improve. The latest survey shows a weighted 92 per cent of manufacturers projecting a similar or higher level of employment in the fourth quarter of 2009 as compared to a quarter ago. This is higher than the weighted 87 per cent recorded in the survey conducted a quarter ago. The electronics cluster is expected to hire more workers while the transport engineering and the general manufacturing industries clusters are the least positive about employment prospects in the fourth quarter of 2009.

IV    Factors Affecting Export Orders for October - December 2009

7. A weighted 49 per cent of firms in the manufacturing sector reported no limiting factors that will affect their ability to obtain direct export orders in the fourth quarter of 2009. Of the weighted 44 per cent of firms that indicated export constraints, price competition and political/economic   conditions are the leading factors. In particular, price competition is key factor for the precision engineering and transport engineering clusters.

Editors' Note:  

For further information on the business expectation results, please contact 
Mr Chong Tse Ming 
(Tel: 6832-6677 / hp: 9148-4194 / Email: quin_chong@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 fourth quarter of 2009 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 fourth quarter of 2009 was conducted between September and October 2009 by the Economic Development Board. Out of a total of 401 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.

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