I      Business Sentiments for July – December 2016

• A majority of firms (a weighted 77%) in the manufacturing sector expects business situation in the second half of 2016 to remain similar to a quarter ago. A weighted 11% of manufacturers expects business conditions to improve while a weighted 12% projects a deteriorating business outlook. Overall, a net weighted balance of 1% of manufacturers expects a less favourable business situation for the period July - December 2016, compared to the second quarter of 2016.
• Within the manufacturing sector, the precision engineering cluster is cautiously optimistic in the next six months ending December 2016, with a net weighted balance of 10% of firms anticipating improved business conditions ahead. This optimism is largely led by the machinery & systems segment, which foresees higher orders for semiconductor related equipment in the months ahead. However, the precision modules & components segment expects business activities to deteriorate, particularly in the industrial rubber products and metal stampings industries.
• In the electronics cluster, a net weighted balance of 6% of firms expects business prospects to improve for the period July – December 2016, compared to the second quarter of 2016. The semiconductors, computer peripherals and other electronic modules & components segments expect a seasonal pick-up in market demand in the second half of 2016.
• In the biomedical manufacturing cluster, a net weighted balance of 4% of firms projects better business situation in the next six months ending December 2016. The medical technology segment expects export demand to remain strong while majority of firms in the pharmaceuticals segment anticipates a similar business situation as the preceding quarter.
• On the other hand, a net weighted balance of 8% of firms in the general manufacturing cluster is less upbeat about the second half of 2016, compared to a quarter ago. Within the cluster, the food, beverages and tobacco segment anticipates business conditions to improve, in view of the upcoming festive seasons. The printing and miscellaneous industries segments, however, foresee declining orders for commercial printing and lower demand for construction related materials, respectively.
• In the transport engineering cluster, a net weighted 11% of firms foresees business outlook to worsen for the period of July to December 2016. This is due to the marine and offshore engineering segment, which anticipates offshore exploration and drilling activities to remain lackluster in the months ahead.
• The chemicals cluster is the least optimistic with a net weighted balance of 19% of firms anticipating business situation to weaken in the second half of 2016, compared to a quarter ago. The weak outlook is broad-based with all segments within the cluster foreseeing a decline in business activity. In particular, the petroleum segment is less upbeat about business prospects, as the refiners are concerned about weakening refining margins.

II     Output Forecast for July – September 2016

• A net weighted balance of 9% of manufacturers expects output to decrease in the third quarter of 2016, compared to the second quarter of 2016.
• Within the manufacturing sector, the precision engineering and electronic clusters project a higher production level in the third quarter of 2016, as compared to the preceding quarter. In the precision engineering cluster, the machinery & systems segment anticipates more production of semiconductor related equipment. Almost all segments in the electronic cluster project a rise in output, in anticipation of the seasonal pick-up in export orders.
• In contrast, the transport engineering cluster forecasts a lower level of activity in the third quarter of 2016, compared to a quarter ago. The marine and offshore segment expects lower rig- building activities, as well as, sluggish demand for oil & gasfield equipment, on the back of the low oil price environment. In the biomedical manufacturing cluster, a net weighted 34% of firms projects a weaker production outlook. This is largely due to the pharmaceutical segment, which foresees a lower volume of active pharmaceutical ingredients to be produced in the third quarter of 2016.

III    Employment Forecast for July – September 2016

• A net weighted balance of 12% of manufacturers plan to hire fewer workers in the third quarter of 2016 as compared to the second quarter of 2016. All except the electronics and the biomedical manufacturing clusters expect to hire fewer workers in the period July – September 2016.

IV    Factors Affecting Export Orders for July – September 2016

• A weighted 67% 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 2016. The weighted 30% of firms that indicated export constraints cited price competition from overseas competitors and economic & political conditions abroad as the most important limiting factors.

Editors' Note:

For media enquiries, please contact 
Ms Yu Qinyan
(Tel: 6832-6427 / HP: 9733-9437 / Email: yu_qinyan@edb.gov.sg).

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

Technical Notes

The Survey of Business Expectations of the Manufacturing Sector for the second quarter of 2016 was conducted between March and April 2016 by the Economic Development Board. Out of a total of 433 manufacturing establishments surveyed, 96% 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). Establishments’ responses are then weighted and aggregated to derive the weighted percentage for “up”, “same” or “down” at sub-cluster, cluster and overall manufacturing level. For employment forecast, employment is used as the weighting variable at both establishment and cluster level. For general business outlook and output forecast, total output and value added are used as weights at the establishment level and cluster level respectively.

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%, the plus sign before the percentage figure indicates a positive balance or net upward movement, and not a 30% 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 ‘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.

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