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I Business Expectations for January - June 2008
1. The manufacturing sector is cautious about business prospects in the first half of 2008, although most clusters expect output to rise in the first quarter of the year. A weighted 10 per cent of manufacturers expect the general business situation to improve, while 8 per cent predict deterioration. The result yields a net weighted balance of 2 per cent of manufacturers projecting better business conditions. This is a weaker sentiment compared to the net weighted balance of 7 per cent recorded in the same period last year. While there are common concerns over mounting cost pressures and uncertainty in global economic conditions for first half of the year, a net weighted balance of 14 per cent of manufacturers expect production to increase in the first quarter of 2008, over the last quarter of 2007.
2. Sentiments within the electronics cluster are muted, with a net weighted balance of 1 per cent of electronics manufacturers expecting business conditions in the first half of 2008 to improve, as compared to the last quarter of 2007. Seasonal demand for electronic goods is expected to soften after the year end festive peak, and whilst a general deceleration is not anticipated, firms envisage global dynamics to continue exerting competitive pressures on the cluster. Overall, a net weighted balance of 5 per cent of electronics manufacturers expect production to increase in the first quarter of the year, over the previous quarter, in tandem with their forecasts for direct exports and orders. Employment outlook for the first quarter of the year remains positive, with a net weighted 18 per cent of firms in the cluster expecting to hire more workers in the next three months.
3. The majority of firms in the chemicals cluster expect business conditions to remain largely unchanged for the first half of 2008, compared with the previous quarter. Sentiments are most upbeat for firms in the other chemicals segment, which cited reasons such as improving regional export markets and strong demand from the construction sector for the optimism. On the production front, output in the specialties and other chemicals segments are expected to rise in the first quarter of 2008, over the previous quarter, boosted by an anticipated increase in exports and orders during the same period. Refineries and petrochemical manufacturers, expect throughput in the first quarter of the year to stay at levels similar to those in the fourth quarter of 2007.
4. Business conditions in the biomedical manufacturing cluster are expected to remain the same in the next six months ending June 2008. In the pharmaceutical segment, output is anticipated to rise in the first quarter of the year, after a lull in the previous quarter. Accordingly, finished goods stocks are expected to rise in the same period, for export later in the year. Firms in the medical technology segment expect production and orders to remain steady at the same level as the last quarter of 2007.
5. A net weighted balance of 8 per cent of the precision engineering cluster expects the business environment to worsen in the first half of 2008. Besides the usual pattern of seasonal slowdown, escalating production and raw material costs as well as fluctuations in the US dollar add to the pessimistic sentiment amongst precision engineering manufacturers. Whilst the overall output of the cluster is forecast to decrease on a quarter-to-quarter basis for the first quarter of the year, a net weighted balance of 5 per cent of firms in the machinery & systems segment expect production to increase in the first quarter of the year, on the back of anticipated rise in export orders and shipments.
6. Optimistic sentiments continue to prevail in the transport engineering cluster, particularly in the marine & offshore engineering segment, which foresees sustained demand for shipyard and conversion services, and a strong backlog of orders for the next six months ending June 2008. In terms of output, both the marine & offshore engineering and aerospace segments expect an increase in first quarter of the year, compared with a quarter ago. The aerospace segment anticipates more repair and servicing jobs as airlines send in their planes for maintenance following the peak travelling period in December. The land transport segment predicts a drop in production in the first quarter of the year, as per seasonal trend.
II Factors Affecting Export Orders for January - March 2008
7. A weighted 53 per cent of firms in the manufacturing sector reported no limiting factors affecting their ability to obtain more export orders in the third quarter of 2007. Out of the weighted 42 per cent of manufacturers which cited factors affecting their ability to obtain more export orders, a weighted 25 per cent ranked price competition from overseas competitors to be the most important limiting factor. Another weighted 6 per cent also cited the strong Singapore dollar, and political or economic conditions abroad, as factors limiting their ability to accept more orders.
Editors' Note:
For further information on the business expectation results, please contact Ms Millie Lam (Tel: 6832-6031 / hp: 9740-7372 / Email: milliel@edb.gov.sg).
For media enquiry, 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 third quarter of 2007 are available on http://www.sprinter.gov.sg and http://www.sedb.com
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