I Business Sentiments for January – June 2015
- The majority of manufacturers (a weighted 77 per cent) expect business situation to remain stable in the first half of 2015. A weighted 10 per cent of firms expect better business prospects while a weighted 13 per cent foresees slower business. Overall, a net weighted balance of 3 per cent of manufacturers expects a weaker business situation in the first half of 2015 compared with the fourth quarter of 2014.
- All except the electronics and transport engineering clusters expect better business prospects in the period January – June 2015. The chemicals cluster is the most optimistic with a net weighted balance of 12 per cent of firms expecting improved business conditions in the next six months ending June 2015. In particular, the petroleum and petrochemical segments expect a lower operating cost environment, on account of declining crude oil and feedstock prices.
- Similarly, the general manufacturing industries cluster is optimistic about business situation in the first half of 2015. This positive sentiment is led by the food, beverage and tobacco segment which expects domestic demand to increase due to Chinese New Year.
- On the other hand, the transport engineering cluster shows less optimism in the first half of 2015 compared with a quarter ago. In particular, the marine and offshore engineering segment expects orders to decline in the months ahead, as global oil and drilling firms cut back on capital expenditure in view of falling oil prices.
II Output Forecast for January – March 2015
- Compared to the fourth quarter of 2014, a net weighted balance of 7 per cent of the manufacturers expects output to decline in the first quarter of 2015.
- Within the manufacturing sector, the chemicals cluster is the most optimistic with a net weighted balance of 36 per cent of firms projecting a higher production level in the first quarter of 2015 compared with the preceding quarter. This is mainly led by the petroleum segment which expects resumption of production following a series of maintenance shutdowns in the fourth quarter of 2014.
- In contrast, the electronics cluster is the least upbeat, with a net weighted balance of 22 per cent of firms projecting a lower production level in the seasonally less active first quarter of 2015. All segments expect output declines with the exception of the semiconductors segment. The transport engineering cluster also projects a weaker production outlook in the first three months of 2015. Within the cluster, the marine and offshore segment projects a lower level of activity following a high percentage of completion recorded in fourth quarter of 2014. The aerospace segment also expects fewer repair jobs in the period January – March 2015.
III Employment Forecast for January – March 2015
- A net weighted balance of 2 per cent of manufacturers plan to hire fewer workers in the first quarter of 2015 compared with the fourth quarter of 2014. All except the biomedical manufacturing and transport engineering clusters expect to hire fewer workers in the period January – March 2015.
IV Factors Affecting Export Orders for January – March 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 first quarter of 2015. The weighted 34 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 first quarter of 2015 was conducted between December 2014 and January 2015 by the Economic Development Board. Out of a total of 426 manufacturing establishments surveyed, 95 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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