SINGAPORE – The business expectations of firms in both the manufacturing and services sectors turned positive after a year of gloom, with sentiment boosted by the start of Covid-19 vaccinations across countries.
Their sentiments were captured in the latest quarterly surveys released separately by the Economic Development Board (EDB) and the Department of Statistics (SingStat) on Friday (Jan 29).
A weighted 36 per cent of manufacturers expect better business conditions for the first six months of this year compared with the fourth quarter of 2020, while a weighted 4 per cent expect things to worsen, the EDB survey showed.
Thus, an overall net weighted balance of 32 per cent of manufacturers were upbeat on their business outlook. This was the first overall positive outlook for the sector since the survey was conducted around the start of 2020.
Likewise, the services sector turned optimistic after being downbeat for more than a year.
Twenty-one per cent of firms were optimistic about business conditions, while 14 per cent of firms were pessimistic, resulting in a net weighted balance of 7 per cent of firms having a positive business outlook for the first six months of 2021, the Singstat survey showed.
This was the first positive net weighted balance for the services sector after four quarters of negative sentiments.
Within the services sector, several industries expect business conditions to improve in the first half of this year, compared with July to December last year.
These are the finance and insurance; recreation; community and personal services; food and beverage services; retail trade; and information and communications industries.
However, sectors such as accommodation and real estate continue to be less optimistic in their business outlook due to global travel restrictions and work-from-home arrangements.
All manufacturing clusters anticipate better business prospects in the first half of this year, compared with the last quarter.
The biomedical manufacturing cluster is the most optimistic, with a net weighted balance of 46 per cent of firms expecting a favourable operating environment.
Within the cluster, the pharmaceuticals segment expects improved market conditions such as fewer supply chain disruptions.
Similarly, the medical technology segment expects more orders for both Covid-19 and non-Covid-19-related medical devices in the near-term.
As for employment, the services sector expects hiring to remain at a similar level for the first quarter of 2021, compared with the fourth quarter of last year.
The information and communication services industry is expected to hire more in the first quarter. In particular, firms engaged in computer programming activities might increase hiring due to higher demand for their services.
In contrast, firms in the accommodation sector expect lower employment in the first quarter due to weaker demand.
Meanwhile, the bulk of manufacturing firms – making up a weighted 86 per cent – expect employment in the first quarter of this year to remain similar to the fourth quarter of last year.
Overall, a net weighted balance of 4 per cent of manufacturers plan to hire more workers in the next three months.
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