Business pessimism persists in Singapore

New orders for the manufacturing sector plunged by 28 percentage points.

According to a release, following a positive upswing in the second quarter, local business optimism continues to rise for the second consecutive quarter with notable gains across most industries. According to Dun & Bradstreet (D&B)'s latest Business Optimism Index (BOI), local companies across most sectors remain upbeat about the business environment. The study reveals that 5 of 6 leading business indicators are in the expansion region, driven mainly by positive expectations on volume of sales and net profits in the 3rd quarter.

While business sentiments have risen in the third quarter, expectations for the rest of the year are likely to remain subdued as economic uncertainties continue to escalate globally. A year-on-year analysis of the BOI study shows that net optimism has declined sharply with all 6 leading indicators in the contraction region compared to 2 leading indicators a year ago in Q3 2011. Net profits and volume of sales experienced substantial declines at 17.2 percentage points and 14.9 percentage points respectively.

Meanwhile, new orders for the manufacturing sector also took a plunge by 28 percentage points year-on-year. Selling price, inventory and employment have also declined marginally over the past year at 4.1 percentage points, 5.6 percentage points and 7.7 percentage points respectively.

Commenting on the weakened economic outlook compared to a year ago, Ms. Audrey Chia, D&B's Chief Executive Officer said, "Over the past year, external economic developments have weighed heavily on the local economy. Thus, it is not surprising to see a trend of weakened business confidence here, especially at a time when economic doldrums have been persistent globally.

She further added, “Moving forward, we are still fairly positive about local business climate as economic growth although moderated has been steadily picking up over the past two quarters as evident from the rise in business optimism for the third quarter.”