35% of firms foresees business conditions to deteriorate

Survey shows only 10% of firms expects business to improve in the first half of 2012.

Releasing the results of the Business Expectations Survey (Services Sector), the Singapore Department of Statistics said:

Majority of firms (a weighted 55%) in the services sector expects the business situation to remain unchanged for the period of Jan - Jun 2012 compared with Jul – Dec 2011. A weighted 10% of firms expects business to improve while a weighted 35% of firms foresees business conditions to deteriorate.

Consequently, an overall net weighted balance of 25% of firms in the services sector expects business conditions to be less favourable for the period. The magnitude of the negative net weighted balance is higher than the negative net weighted balance of 9% recorded for Oct 2011 - Mar 2012 in previous quarter’s survey. This is also in contrast to the positive net weighted balance of 19% registered in the same period of the previous year (i.e. Jan - Jun 2011).

Within the wholesale trade industry, a net weighted balance of 19% of firms expects less favourable business conditions for the first six months ending Jun 2012. Wholesalers of household electrical appliances, telecommunications equipment and chemicals & chemical products, are among those that anticipate business to decline.

In the retail trade industry, a net weighted balance of 29% of firms predicts business to be less brisk for the period of Jan - Jun 2012 over Jul - Dec 2011. Retailers of motor vehicles, household electrical appliances and cosmetics & toiletries are among those that project a drop in business activity in the coming months.

For the transport & storage industry, a weighted 70% of firms expects business to remain the same for the six-month period ending Jun 2012. For the remaining firms, a weighted 8% foresees more favourable business conditions for the coming months, mainly from land transport firms.

On the other hand, a weighted 22% of firms, largely the shipping lines as well as firms providing air transport and freight forwarding, packing & crating services, is less upbeat about the business prospects ahead. This translates to a net weighted balance of 14% of firms in the transport & storage industry expecting lower business activity for Jan - Jun 2012.

The accommodation industry expects less favourable business conditions for Jan – Jun 2012 with a net weighted balance of 29% of firms anticipating slower business. Similarly, a net weighted balance of 27% of firms in the food and beverage services industry predicts a decline in business.

Firms in the information & communications industry are generally cautious in their business outlook, with a weighted 78% of them expecting business to remain unchanged in first half of 2012 over the previous six months.

Among the remaining firms, a weighted 3% is optimistic while a weighted 19% of firms anticipates lower business level in the coming months. This means that a net weighted balance of 16% of firms in information & communications services is less optimistic about business prospects in the first half of 2012.

Firms in the financial & insurance industry continue to forecast slower business for the first half of 2012. In particular, banks, finance companies and fund managers expect business conditions to weaken.

In the real estate industry, a net weighted balance of 60% of the firms is less upbeat about business conditions for the period of Jan - Jun 2012 compared with Jul - Dec 2011. In particular, real estate developers express concern over the implementation of additional property cooling measures.

A net weighted balance of 15% of firms in the business services (excluding real estate) is less optimistic about business prospects in the first half of 2012.

For the recreation, community & personal services industry, a net weighted balance of 9% of firms projects business to improve in the coming months.