Services sector upbeat about next 6 months

But manufacturing sector expects business conditions to deteriorate

Services sector upbeat about next 6 months

COMPANIES in the services sector are expecting some holiday cheer for the next six months while their manufacturing counterparts are bracing for tougher days, surveys by the Singapore government show - PHOTO: SPH

Companies in the services sector are expecting some holiday cheer for the next six months while their manufacturing counterparts are bracing for tougher days, surveys by the Singapore government show.

On the whole, an 8 per cent net weighted balance of companies in the services industry sees better business prospects in the six months to March 2014 amid the year-end holiday shopping season, the Department of Statistics said yesterday. However, sentiments are a notch lower compared to the preceding quarter's 9 per cent.

A second survey by the Economic Development Board (EDB) revealed that a net one per cent of manufacturers expects business conditions to deteriorate over the same period. A quarter ago, a net 8 per cent of firms was optimistic about prospects.

"Interestingly, the business expectation surveys were less optimistic compared to a quarter ago, despite the better-than-expected Q3 advance GDP growth," Selena Ling, OCBC's head of treasury research and strategy, said.

Singapore's economy expanded 5.1 per cent in the third quarter from a year earlier, after growing a revised 4.2 per cent in the previous three months. Services remained the key pillar of growth, expanding 5.7 per cent year-on-year. Manufacturing grew 4.5 per cent from the year-ago period, supported by the transport engineering and electronics clusters.

Within the services sector, all industries except the real estate and recreation, community and personal services industries expressed a positive outlook. The food and beverage, accommodation and retail businesses are most optimistic that holiday spending will boost revenues.

Real estate developers continue to cite the series of government measures, which include the total debt servicing ratio framework and uncertain economic conditions as the reasons for their negative outlook, the Department of Statistics said.

A net 16 per cent of real estate firms has predicted less favourable business conditions, though Ms Ling said that this is "a big improvement" from the 41 per cent a quarter ago.

Among manufacturing companies, the general manufacturing industries cluster is the most optimistic as the food, beverages and tobacco segment anticipates higher orders during the festive seasons.

Meanwhile, the electronics cluster is the least upbeat. "Electronics firms project a less favourable business situation in view of lower orders, due in part to seasonal factors," EDB said.

Capturing a share of the action this season is also complicated by the iffy global economy, as manufacturers project a lower production level due to weaker export demand.

All but the general manufacturing industries and transport engineering clusters expect output to decline in the next three months.

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