Singapore Firms Less Optimistic About Future Prospects

Singapore companies have become less optimistic about prospects in the coming months, two sentiment surveys showed, a further sign that economic growth could slow from the stellar pace of last year.

The Singapore Economic Development Board said its latest quarterly survey of business expectations in the manufacturing sector showed a weighted 13% of companies expect conditions to improve in the next six months while 12% have become less optimistic, Nikkei reported.

The difference—1% of companies forecasting better conditions—was lower than the 5% in the previous survey.

A separate survey by the department of statistics showed a net 3% of companies expect more favorable business conditions in the next six months, down from 9% in the previous survey published in October. The responses in both surveys, which were carried out in December and January, were weighted to reflect the size of the respective companies.

Singapore’s economic growth hit a three-year high of 3.5% in 2017, according to the government’s advance estimate, helped by a surge in manufacturing during the first 11 months of the year.

However, the sector has begun to show signs of weakness. Output declined unexpectedly in December from a year ago as the slight increase in the production of semiconductors and computer peripherals failed to offset weakness in areas like rigs and pharmaceuticals.

Many economists expect Singapore’s gross domestic product growth to be revised slightly lower when detailed estimates are released in February.

In a report on Wednesday, HSBC said it expects the domestic economy to have grown 3.3% last year. It forecasts the pace to slow to 2.7% this year and 2.5% in 2019.

In the report on its survey, EDB said precision engineering was the most optimistic cluster within manufacturing, with a net weighted balance of 36% of companies anticipating improved business conditions ahead. Companies involved in the machinery and systems segment were the most bullish as they foresee continued strong demand for semiconductor-related equipment.

A net 10% of companies in the electronics cluster were bearish about prospects, with EDB attributing the softer business prospects to seasonal factors.

More encouragingly, a net 5% of companies in the marine and offshore engineering cluster expect business conditions to improve marginally in the next six months amid a modest uptick in oil prices.