Services sector expects softer business conditions in Q2

Retail, F&B, and transport weigh on outlook.

The services sector expects business conditions to be slightly less favourable in the coming months, according to the Department of Statistics.

From April to September 2026, 13% of firms expect business conditions to improve, whilst 17% expect conditions to deteriorate.

This resulted in a net weighted balance of -4%, reversing from the +4% recorded for the January to June 2026 outlook.

Revenue expectations are also slightly weaker. For April to June 2026, 13% of firms expect operating revenue to increase, whilst 14% expect it to decline, resulting in a net weighted balance of -1%.

Employment expectations are more stable, with 9% of firms expecting employment to rise and another 9% expecting it to fall, giving a neutral net weighted balance of 0%.

The cautious outlook is broad-based across several service industries. The food and beverage services industry reported the weakest general business outlook, with a net weighted balance of -40%.

However, some industries remain optimistic. The wholesale trade industry recorded a positive net weighted balance of +11%, supported by demand for artificial intelligence-related products.

For operating revenue in the second quarter, retail trade had the least favourable outlook at -33%, reflecting expectations of lower tourist and local consumer spending.

The food and beverage services (-31%), accommodation (-27%), and transportation and storage (-27%) industries also expect weaker revenue.

On the other hand, recreation, community, and personal services expects revenue to increase, with a net weighted balance of +18%, supported by healthcare and childcare demand.

On employment, hiring is expected to remain broadly unchanged across the services sector. The weakest hiring outlook came from food and beverage services (-23%), as firms expect lower hiring activity after the Chinese New Year period.

In contrast, recreation, community and personal services expects stronger hiring, with a net weighted balance of +14%, to meet higher demand for healthcare and childcare services.

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