SINGAPORE – Local business sentiments are showing signs of a recovery after being weighed down for most of the year by an uncertain global economic outlook amid a trade war between the world’s two biggest economies.
Business confidence strengthened to +5.31 percentage points for the first quarter of 2020 from the near two-year low of +4.82 percentage points for the fourth quarter of this year, Singapore Commercial Credit Bureau (SCCB) said in its Business Optimism Index (BOI) study released on Tuesday (Dec 3).
Compared with a year ago, however, the BOI fell to +5.31 percentage points for the first quarter of 2020 from +7.19 percentage points for the first quarter of 2019.
“Despite the muted outlook among local firms for most of 2019, we expect a slight turnaround in sentiments moving into Q1 2020,” Ms Audrey Chia, SCCB’s chief executive officer, said in the release.
The services and financial sectors were the most optimistic, while the construction, wholesale and manufacturing sectors were the gloomiest. Key challenges to business include global economic uncertainties, increased competition and rising business costs.
“The services and financial sectors will remain key pillars of growth, while the manufacturing and construction sectors will see a softer outlook in the coming months,” said Ms Chia.
Of the six indicators in the index, employment, inventory levels and new orders dropped from the previous quarter, while net profits, volume of sales and selling price increased.
SCCB polled 200 business owners and senior executives representing major industry sectors across Singapore. The index figures represent the net percentage of respondents expecting higher sales and such, compared with the same quarter a year ago.
The SCCB also said that compared with 2019, firms have a mixed outlook about their investments next year. The majority, 73 per cent, expect investments to remain unchanged.
The top two most important areas of investment for 2020 are information technology, and machinery and capital equipment. In technology investments, most of the firms are expecting to invest in software and subscription-based Information and communications technology (ICT) services, followed by investments in ICT training programmes such as data analytics and cyber security and ICT infrastructure and network.
Said Ms Chia: “For 2020, firms are mixed about their investments for expansion plans compared to the previous year. The expected increase in investments is most marked within the services sector as compared to manufacturing and construction.”