I Business Sentiments for July – December 2015
- The majority of firms (a weighted 70 per cent) in the manufacturing sector expects business environment in the second half of 2015 to remain similar to a quarter ago. A weighted 16 per cent of manufacturers predicts business conditions to improve while a weighted 14 per cent foresees deterioration. Overall, a net weighted balance of 2 per cent of manufacturers expects an improved business situation for the period July – December 2015, compared to the second quarter of 2015.
- Within the manufacturing sector, the biomedical manufacturing cluster is the most optimistic, with a net weighted balance of 33 per cent of firms anticipating improved business conditions in the next six months ending December 2015. This positive sentiment is largely due to higher order expectations in both the pharmaceutical and medical technology segments in the months ahead.
- The electronics and precision engineering clusters are cautiously optimistic in the next six months, with a net weighted balance of 3 per cent of manufacturers in each cluster projecting better business prospects in the second half of 2015. In the electronics cluster, the outlook is mixed, with the data storage and other electronic modules & components segments expecting market demand to remain strong, while the semiconductor and infocomms & consumer electronics segments are less optimistic. In the precision engineering cluster, the slightly positive outlook is mainly attributed to the machinery & systems segment, as the semiconductor-related equipment and refrigerating equipment industries anticipate higher export deliveries in the next few months.
- On the other hand, the chemical and transport engineering clusters are less upbeat about business conditions in the next six months ending December 2015, as compared to a quarter ago. A net weighted balance of 15 per cent of chemical firms projects a less favourable business situation. In particular, the petroleum and petrochemical segments expect business situation to decline as a result of excess supply of refined and chemical products in the region. Within the transport engineering cluster, the marine and offshore engineering segment foresees weaker orders to continue into the second half of 2015 as a result of the low oil prices, which impacted offshore exploration and drilling activities.
II Output Forecast for July – September 2015
- Compared to the second quarter of 2015, a net weighted balance of 4 per cent of manufacturers expects output to increase in the third quarter of 2015.
- Within the manufacturing sector, a net weighted balance of 8 per cent of the biomedical manufacturing segments projects a higher level of production in the third quarter of 2015. The medical technology segment expects an increased output to meet export demand for its newer range of medical devices. The pharmaceutical segment plans to produce a higher volume of active pharmaceutical ingredients in the next three months. In the electronics cluster, a net weighted balance of 7 per cent of firms expects higher output in the next three months. The only exception is in the infocomms and consumer electronics segment. In the general manufacturing industries cluster, the slightly positive output outlook is supported by the food, beverage & tobacco segment, which projects a higher output level in anticipation of upcoming festivals (e.g. Mid-Autumn Festival).
- In contrast, the precision engineering and transport engineering clusters have a less optimistic production outlook. A net weighted balance of 2 per cent of the precision engineering cluster projects lower output, in view of weaker orders. Similarly, a net weighted 2 per cent of the transport engineering cluster predicts a declining output trend in the months ahead, due to fewer orders received and delays in project deliveries.
III Employment Forecast for July – September 2015
- A net weighted balance of 4 per cent of manufacturers plans to hire more workers in the period July – September 2015, compared to a quarter ago. While the electronics and biomedical manufacturing clusters expect to hire more workers, the transport and precision engineering clusters plan to reduce headcount.
IV Factors Affecting Export Orders for July – September 2015
- A weighted 59 per cent 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 2015. The weighted 35 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 third quarter of 2015 was conducted between June 2015 and July 2015 by the Economic Development Board. Out of a total of 431 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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