I	Business Sentiments for January 2010 – June 2010
1.	Business sentiments in the manufacturing sector are expected to continue improving in the first half of 2010. The latest survey shows a weighted 21 per cent of firms expecting business conditions to improve and a weighted 7 per cent projecting deterioration. Overall, a net weighted balance of 14 per cent of manufacturers anticipate a more favorable business situation in the first half of 2010 as compared to the fourth quarter of 2009.
2.	The positive business sentiment is broad-based with all clusters projecting a better business situation as compared to 3 months ago. Within the manufacturing sector, the precision engineering cluster is the most optimistic, with a net weighted balance of 23 per cent of firms expecting business conditions to improve. The cluster foresees increasing demand for machinery in tandem with higher capital expenditure in 2010. Orders for precision modules & components are also expected to grow in tandem with the global economic recovery.
3.	The transport engineering cluster is the next most optimistic with a net weighted balance of 21 per cent of firms projecting improved business conditions over the next six months. Within the cluster, the marine & offshore segment expects to secure more orders on the back of oil price increases. The aerospace segment also predicts a recovery in the level of activity for maintenance, repair & overhaul of air planes as the global economy picks up.
II.	Output Forecast for January – March 2010
4.	Compared to the fourth quarter of 2009, a net weighted 8 per cent of the manufacturers expect output to increase in the first quarter of 2010.
5.	The biomedical manufacturing cluster is the most bullish, with a net   weighted balance of 47 per cent of firms projecting higher output in the first quarter of 2010 compared to the fourth quarter of 2009. The higher output is due to the production of a different mix of active pharmaceutical ingredients in the next three months.
6.	The chemicals & the precision engineering clusters also forecast higher output for the first quarter of 2010, compared to a quarter ago. In the chemicals cluster, all segments expect higher output except the petroleum segment which is still affected by weak refining margins. On the other hand, the rest of the clusters project lower output in the next three months due to seasonal factors (e.g. festive holidays) and lower orders.
III	Employment Forecast for January - March 2010
7.	Employment prospects in the manufacturing sector are expected to remain relatively stable. A weighted 86 per cent of manufacturers expect employment level in the first quarter of 2010 to remain similar to the fourth quarter of 2009. The chemical and precision engineering clusters are expected to hire more workers while the transport engineering and general manufacturing industries are least positive about employment prospects in the first quarter of 2010.
IV	Factors Affecting Export Orders for January - March 2010
8.	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 first quarter of 2010. 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  Ms Corinna Ng  (Tel: 6832-6038 / hp: 8418-5600 / Email: corinnan@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 first quarter of 2010 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 first quarter of 2010 was conducted between December 2009 and January 2010 by the Economic Development Board. Out of a total of 401 manufacturing establishments surveyed, 94 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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