I Business Sentiments for April – September 2016
- A majority of manufacturers (a weighted 71%) expect business situation for the next six months ending September 2016 to remain similar to the first quarter of 2016. A weighted 15% of manufacturers expects business conditions to improve while a weighted 14% of manufacturers projects business outlook to deteriorate. Overall, a net weighted balance of 1% of manufacturers expects an improved business situation in the period April 2016 – September 2016, compared with the first quarter of 2016.
- A net weighted balance of 27% of firms in the precision engineering cluster expects business conditions to pick up slightly in the six months ahead, relative to the seasonally less active first quarter of the year. Among the precision engineering industries, the semiconductor equipment and bonding wires industries anticipate a rise in orders in the next three months.
- In the electronics cluster, a net weighted balance of 9% of firms is cautiously optimistic about business prospects in the next six months ending September 2016. Within the cluster, the semiconductors and other electronic modules & components segments expect better market demand in the second quarter of 2016, compared to the seasonally less active first quarter of 2016.
- In the biomedical manufacturing cluster, a net weighted balance of 8% of firms anticipates a positive business outlook in the next six months ending September 2016. Both the pharmaceuticals and medical technology segments are optimistic, in anticipation of higher export demand.
- A net weighted balance of 7% of firms in the chemicals cluster anticipates business situation to weaken in the six months ending September 2016. Within the cluster, the petroleum segment continues to be weighed down by excess supply of refined products in the region while the specialties segment expects demand to be lacklustre, on the back of weak global economic conditions.
- In the general manufacturing cluster, a net weighted balance of 16% of firms expects business prospect to worsen in the six months ahead. While the majority of firms in the food, beverage and tobacco segment expect business situation to remain unchanged, the printing and miscellaneous industries segments foresee weaker business prospects ahead. The miscellaneous industries segment anticipates softer business prospects due to slowdown in domestic construction activities and the global oil & gas industry.
- The transport engineering cluster has the most pessimistic outlook, with a net weighted balance of 28% of firms expecting business situation to deteriorate for the period April to September 2016, compared with the last three months. This is largely led by the marine and offshore engineering segment, which is weighed down by lacklustre offshore exploration and drilling activities, amidst the low oil price environment.
II Output Forecast for April – June 2016
- A net weighted balance of 3% of manufacturers expects output to increase in the second quarter of 2016, compared to the seasonally less active first quarter of 2016.
- Within the manufacturing sector, the precision engineering cluster is the most optimistic with a net weighted balance of 32% of firms projecting a higher production level in the second quarter of 2016 compared with the preceding quarter. The machinery & systems segment expects higher output of semiconductor related equipment while the precision modules & components segment anticipates an increase in output of bonding wire and optical instruments.
- In the electronic cluster, a net weighted balance of 12% of firms expects output to increase in the second quarter of 2016 compared to the previous quarter. The semiconductors and other electronic modules & components segments anticipate an increase in output while the remaining segments foresee output declines. The biomedical manufacturing cluster expects higher output in the next three months with both the pharmaceuticals and medical technology segments anticipating an increase in production.
- In contrast, the transport engineering cluster projects a weaker production outlook in the second quarter of 2016. The marine and offshore segment continues to expect lacklustre activities in rig-building and the production of oil & gas-field equipment, amidst the low oil price environment. In the general manufacturing cluster, a net weighted balance of 5% of firms forecasts a lower level of production in the printing and miscellaneous industries segments.
III Employment Forecast for April – June 2016
- A net weighted balance of 12% of manufacturers plans to hire fewer workers in the second quarter of 2016, compared with the first quarter of 2016. The transport engineering, general manufacturing and precision engineering clusters are the least optimistic in employment outlook.
IV Factors Affecting Export Orders for April – June 2016
- A weighted 68% 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 2016. The weighted 29% of firms that indicated export constraints cited price competition from overseas competitors and economic and political conditions abroad as the most important limiting factors.
V Investment Plans for April 2016 – March 2017
- A weighted 70% of manufacturers plans to invest in plant and machinery in the next twelve months (April 2016 – March 2017). Of which, a weighted 57% of firms expects higher or similar levels of capital expenditure compared to the past twelve months. The planned investments are largely for the replacement of worn-out equipment, expanding production capacity of existing products and producing new products.
For media enquiries, please contact
Ms Yu Qinyan
(Tel: 6832-6427 / HP: 9733-9437 / Email: email@example.com).
For further information on the business expectation results, please contact
Ms Leong Pui Ling
(Tel: 6832-6737 / HP: 9877-2580 / Email: firstname.lastname@example.org).
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.
For more information on EDB, please visit www.sedb.com