I Business Sentiments for October 2015 – March 2016
- Business sentiment in the manufacturing sector is expected to soften in the next six months ending March 2016, amidst soft global economic conditions particularly the slowdown in China as well as weak oil and commodity prices. A weighted 10 per cent of manufacturers expects business conditions to improve while a weighted 26 per cent foresees deterioration. Overall, a net weighted balance of 16 per cent of manufacturers anticipates a less favourable business situation in the period October 2015 – March 2016, compared to the third quarter of 2015.
- The softer business expectation in the manufacturing sector is broad-based, with most clusters foreseeing a weaker business outlook in the six months ahead except the biomedical manufacturing cluster. A net weighted balance of 36 per cent of firms in the biomedical manufacturing cluster expects business conditions to improve. Both the pharmaceuticals and medical technology segments project an improved business situation in the next six months ending March 2016.
- A net weighted balance of 13 per cent of firms in the transport engineering cluster expects business conditions to deteriorate in the period October 2015 – March 2016, compared to a quarter ago. This is largely led by the marine & offshore engineering segment which continues to be weighed down by declining offshore exploration and drilling activities, on the back of low crude oil prices.
- In the general manufacturing cluster, a net weighted 15 per cent of firms expects a less favorable outlook in the six months ahead. While majority of the firms in the food, beverage & tobacco and printing segments expect business situation to remain the same, firms in the miscellaneous industry segment foresee business activity to be weak due in part to the slowdown in domestic construction activities.
- In the precision engineering cluster, a net weighted 18 per cent of manufacturers expect business conditions to soften, in view of the weak external economic conditions and lackluster outlook in the global electronics and oil & gas industries.
- The chemicals and the electronics clusters are the most pessimistic, with a net weighted 22 and 38 per cent of firms expecting a worsening situation in the next two quarters, respectively. Firms in both clusters are concerned about the slowdown in China’s economy. In addition, the chemical cluster’s outlook is weighed down by excess supply of refined petroleum and chemical products in the region.
II Output Forecast for October – December 2015
- A net weighted balance of 11 per cent of manufacturers expects output to decrease in the fourth quarter of 2015, compared to the third quarter of 2015.
- The biomedical manufacturing cluster is the most optimistic with a net weighted balance of 25 per cent of manufacturers projecting a higher level of production in the fourth quarter of 2015. The pharmaceuticals and medical technology segments expect an increase in output, with the medical technology segment anticipating an increase in the demand for newer range of medical devices.
- In contrast, the rest of the clusters forecast a lower level of production in the fourth quarter of 2015 compared to a quarter ago, in view of slowing demand arising from weak global economic conditions.
III Employment Forecast for October – December 2015
- Hiring expectations in the manufacturing sector for the fourth quarter of 2015 are expected to be weaker compared to the third quarter of 2015. A weighted 4 per cent of manufacturers plans to hire more workers while a weighted 10 per cent expects to reduce the number of workers employed. Overall, a net weighted balance of 6 per cent of manufacturers foresees lower employment in the fourth quarter of 2015. All except the biomedical manufacturing cluster expect to hire fewer workers in the period October – December 2015.
IV Factors Affecting Export Orders for October – December 2015
- A weighted 58 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 2015. The weighted 36 per cent of firms that indicated export constraints cited price competition from overseas competitors and economic and political conditions abroad as the most important limiting factors.
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The Survey of Business Expectations of the Manufacturing Sector for the fourth quarter of 2015 was conducted between September 2015 and October 2015 by the Economic Development Board. Out of a total of 430 manufacturing establishments surveyed, 97 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.
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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