Not so fast: Singapore’s services sector isn’t as indestructible as it seems, say analysts

Holes in the sector are being exposed.

As Singapore averted yet another technical recession with an overachieving GDP growth of 1.9%, mainly due to an equally expectation-surpassing services growth, it’s easy to see the sector as the be all and end all solution for Singapore’s economic woes.

However, analysts are begging to differ, as even the stellarly-performing services sector has shown signs of deteriorations this quarter.

According to analysts from OCBC, key services industries has shown some signs of slowing down this quarter, and that this should raise alarms.

“There was a momentum moderation in other key services industries like finance & insurance (at +4.8% yoy which is the lowest since 3Q12), information & communications (+4.8% yoy which is the slowest since 4Q14) and business services (+1.5% yoy which is the lowest since 2Q03),” OCBC said.

Meanwhile, analysts from DBS concurs that the services sector took the driver’s seat for the third quarter, as it accounts for two-thirds of the economy.

However, DBS isn’t without its fair share of doubts, as it cites a domestic manpower crunch as one of the headwinds which the services sector will face on the horizon.

“Uncertainties in the global environment will continue to cast a shadow on the performance of the sector going forward,” DBS added.

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