I Business Sentiments for April – September 2015
- Business sentiments in the manufacturing sector are expected to be positive in the next six months ending September 2015. A weighted 13 per cent of manufacturers expects business situation to improve while a weighted 8 per cent foresees deterioration. Overall, a net weighted balance of 5 per cent of manufacturers expects an improved business situation for the period April – September 2015, compared to the first quarter of 2015.
- Within the manufacturing sector, the electronics cluster is the most optimistic with a net weighted balance of 19 per cent of firms anticipating improved business conditions in the next six months ending September 2015. The data storage, semiconductor and other electronic modules & components segments expect better market demand for the period April – September 2015, compared to the seasonally less active first quarter of 2015.
- The precision engineering cluster is the next most optimistic with a net weighted balance of 10 per cent of firms expecting an improved business situation in the next six months. Similarly, this positive sentiment stems from the general expectations that the second quarter is expected to see a seasonal uptick.
- On the other hand, the transport engineering cluster is the least optimistic about business prospects in the next six months, compared to a quarter ago. This is largely led by the marine and offshore engineering segment, which foresees weaker orders due to a slowdown in offshore exploration and drilling activities on the back of low oil prices.
II Output Forecast for April – June 2015
- Compared to the first quarter of 2015, a net weighted balance of 9 per cent of manufacturers expects output to increase in the second quarter of 2015. All clusters, except biomedical manufacturing, project a higher level of production for the period April – June 2015.
- In the electronics cluster, a net weighted balance of 21 per cent of firms expects output to increase in the second quarter of 2015. The other electronic modules & components segment foresees higher production to meet export demand in the months ahead. The semiconductor segment projects a seasonal increase in output in the next three months, compared to the first quarter of the year.
- In the precision engineering cluster, a net weighted balance of 18 per cent of firms expects higher output in the period April – June 2015. The machinery & systems segment expects higher output in semiconductor related equipment and lifts & escalators while the precision modules & components segment anticipates increased output of optical instruments and plastic precision parts.
- In contrast, the biomedical manufacturing cluster is the least upbeat, with a net weighted balance of 16 per cent of firms projecting a lower production level in the second quarter of 2015. This is largely due to the pharmaceutical segment which projects lower output in view of a different product-mix in the second quarter of 2015, compared to the preceding quarter.
III Employment Forecast for April – June 2015
- A net weighted balance of 1 per cent of manufacturers plan to hire more workers in the period April – June 2015, compared to a quarter ago. Within the manufacturing sector, the electronics cluster is the most optimistic about employment opportunities in the three months ahead.
IV Factors Affecting Export Orders for April – June 2015
- A weighted 60 per cent 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 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.
V Investment Plans for April 2015 – March 2016
- A weighted 70 per cent of manufacturers plan to invest in plant and machinery in the next twelve months (April 2015 – March 2016) compared to the past twelve months. Of which, a weighted 55 per cent of firms expects higher or similar levels of capital expenditure. The planned investments are largely for the replacement of worn-out equipment, expanding production capacity of existing products and installation of new production technology.
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The Survey of Business Expectations of the Manufacturing Sector for the second quarter of 2015 was conducted between March and April 2015 by the Economic Development Board. Out of a total of 435 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.
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