ECONOMY, MANUFACTURING | Staff Reporter, Singapore

Service and manufacturing outlooks worsen for Q4 amidst global trade tensions

Real estate services and the machinery & systems manufacturing segment will bear the brunt, according to government agencies.

Global trade tensions and property cooling measures have taken their toll on Singapore’s manufacturing and services outlooks for Q4, according to separate updates from the Department of Statistics (SingStat) and the Economic Development Board (EDB).

SingStat revealed that a net weighted balance of 3% of service sector firms expect favourable business conditions between October 2018 and March 2019, which is considerably lower than the net weighted balance of 9% recorded for Q3 and the the same period in 2017.

Meanwhile, a net weighted balance of 1% of manufacturers anticipate a less favourable business landscape for the period of October 2018 to March 2019, compared to the 7% brighter prospects from Q3, according to the EDB.

“In particular, the machinery & systems segment in the precision engineering cluster and the infocomms & consumer electronics segment in the electronic cluster anticipate weaker orders, given growing concerns over the global trade tensions,” EDB said in a statement.

EDB revealed that the precision engineering cluster had a net weighted balance of 23% firms projecting a fall in production levels in Q4 which it attributed to the lower production anticipated by the machinery & systems segment as a result of uncertainties in demand.

However, the transport engineering cluster is the most optimistic about business conditions, according to EDB’s announcement, with a net weighted balance of 21% of firms expecting improvement. The marine & offshore engineering segment, aerospace, and biomedical manufacturing cluster also have positive sentiments for Q4.

Separately, firms under food & beverages services, retail trade and accomodation industries expect better business prospects for the next six months which coincides with the festive season, SingStat noted.

“All industries within the services sector, except for the real estate industry, foresee business conditions to either be more favourable or remain the same during the period of October 2019 to March 2019 compared with April to September 2018,” SingStat said in a statement.

Food & beverage services led the pack with a net weighted balance of 36%, followed by retail trade (29%), accomodation (17%) and information and communication (13%). Firms engaged in computer programming and consultancy, as well as web portal services, were observed to anticipate higher demand for their services according to SingStat.

A net weighted balance of 5% of firms in the recreation, community & personal services industry were observed to expect business conditions to improve, with healthcare providers amongst the most optimistic in their business outlook.

The real estate industry on the other hand, expects less favourable business conditions with a registered net balance of -18%.

“Real estate developers continue to expect the government property cooling measures including the Additional Buyer’s Stamp Duty (ABSD) and Loan-to-Value (LTV) limits to have a negative impact on the property market,” SingStat noted.

The net weighted balance is the difference between the proportion of optimistic and pessimistic firms surveyed by SingStat and EDB. 

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