Business optimism moderates by 1.39 ppt in Q4

It was hit by trade war woes.

The uptrend in local business optimism for the past three consecutive quarters eased down as the Business Optimism Index (BOI) slipped 1.39ppt to +9.19 ppt in Q4 from +10.58 ppt in Q3, the Singapore Commercial Credit Bureau revealed.

Despite this, business optimism is still saw a significant increase YoY as Q4 2018 BOI inched up 6.59 ppt from +2.60 ppt in Q4 2017.

The study found that only two out of six indicators have risen in Q4 compared to the three in Q3. Indicators which recorded an uptrend are volume of sales which grew 6.59 ppt QoQ to +16.59 in Q4, and net profits, which rose 1.28 ppt to +8.78 ppt.

New orders moderated downwards by 3.32 ppt QoQ to +12.68 in Q4. Inventory levels decreased 2.84 ppt to 13.66 ppt in Q4 whilst employment levels dropped 4.61ppt to +4.39 ppt.

Meanwhile, selling price fell into contraction from +4.5 ppt in Q3 down to -0.98 ppt in Q4.

“We maintain our cautious stance on the outlook of local businesses in the coming months,” SCCB CEO Audrey Chia said. “This is due largely to the potential weakening of global trade flows and negative spillovers brought about by recent retaliatory tariffs between US and China.”

The study found that the services and manufacturing sectors retained to be the most optimistic industries as all six of their indicators remained in the positive region in Q4.

In manufacturing, sustained growth were recorded across all sectors including electronics, biomedical manufacturing and transport engineering. The sector’s volume of sales and net profits both jumped 7.5ppt to +17.5 ppt.

New orders saw a 2.5 ppt increase to +15.0 percentage points in Q4 2018. Inventory levels climbed 10 ppt QoQ to +22.5 ppt.

Meanwhile, selling price fell 5 ppt to +2.5 ppt in Q4 whilst employment levels was dragged down by 10 ppt QoQ to 7.5 ppt in Q4.

For the services sector, all indicators remained in the expansionary zone but have eased down amidst moderations in growth within the information and communications, and corporate services sub-sectors.

The sector saw volume of sales and net profits declining by 6.85 ppt to +12.33 ppt and 9.59 ppt, respectively. Selling price, new orders, and inventory levels each dropped 8.22 ppt QoQ to +8.22 ppt in Q4.

Meanwhile, employment levels have was stable at +9.59 ppt.

In the wholesale sector, five out of six indicators were recorded in the positive territory which is an improvement compared to Q3 where only two indicators landed in the positive zone. According to SCCB, the robust growth was backed by the machinery, equipment and supplies.

The sector saw its net profit rebounding from the negative territory from -10.71 ppt to +17.86 ppt in Q4 2018. New orders inched up 7.14 ppt QoQ to +32.14 ppt.

For inventory levels, the index recorded a 7.14ppt increase to +35.71 ppt. Meanwhile, selling price

Selling price has remained in the contractionary zone but has risen from -7.14 ppt in Q3 to -3.57 ppt in Q4. Volume of sales jumped from 0 ppt to +21.43 ppt whilst employment levels rose from 0 ppt in Q3 to +7.14 ppt in Q4.

The construction sector observed moderate improvements as sentiments deteriorated visibly with improvements seen in only 2 of six indicators.

"The construction sector will see sustained weakness for the rest of the year due to muted activities within the public building segment,” Chia said. 

According to the study, both volume of sales and net profits jumped from +9.09 ppt in Q3 to +27.27 ppt and +18.18 ppt, respectively in Q4 2018. Meanwhile, selling price and inventory fell from 0 ppt to -36.36 ppt and 18.18 ppt in Q4, respectively.

The sector’s employment levels also plunged into the negative zone from +9.09 ppt in Q3 to -45.45 ppt in Q4. New orders sank deeper into the contractionary zone, falling from -9.09 ppt to -36.36 ppt in Q4.

In the transportation sector, the outlook moderated as only three out of six indicators were recorded in the expansionary zone amidst the slight contraction in overall growth of the sector in recent months.

The study found that volume of sales inched up 10 ppt QoQ to +30 ppt in Q4 whilst employment levels grew 5 ppt to +10 ppt in Q4. Meanwhile, new orders dropped 15 ppt QoQ to +5.0 percentage points in Q4.

Net profit sank into the contractionary zone from +20 ppt in Q3 to -50 ppt in Q4. Selling price dropped from 0 ppt to -20.0 ppt whilst inventory levels plunged from +20.0 ppt in Q3 to -5.0 ppt in Q4.

In the financial sector, sentiments remained relatively upbeat with a total of 3 indicators in positive territory for Q4 but were still lagging compared to the 4 indicators in expansionary zone observed in Q3.

According to the study, volume of sales rose 11.11 ppt QoQ to +27.78 ppt in Q4. New orders jumped 11.11 to +22.22 ppt.

Meanwhile, inventory levels fell from +5.56 ppt in Q3 to 0 ppt whilst selling price and employment levels were stuck at 0 ppt in Q4.