Singapore: Business expectations of the manufacturing sector

I     Business Sentiments for January – June 2013

Business outlook in the manufacturing sector is expected to remain weak in the first half of 2013 as slow global economic growth continues to weigh down on business sentiments in Singapore. The latest survey shows that a weighted 8 per cent of manufacturers expect business conditions to improve while a weighted 18 per cent foresee deterioration.

Overall, a net weighted balance of 10 per cent of manufacturers anticipate a less favourable business situation in the period January – June 2013 as compared to the fourth quarter of 2012.    

Within the manufacturing sector, a net weighted balance of 7per cent of the biomedical manufacturers expect business situation to improve in the first half of 2013 compared to a quarter ago. This optimism is led by the pharmaceutical segment which foresees higher demand from overseas.

In the general manufacturing industries cluster, a net weighted balance of 1 per cent of firms project an improved business situation in the next six months. This positive sentiment stems mainly from the food, beverages & tobacco segment,which anticipates improved demand due in part to seasonal factors (e.g. Lunar New Year).  

On the other hand, a net weighted balance of 8 per cent of chemical manufacturers is less upbeat in the first half of 2013 compared to the fourth quarter of 2012.  This is largely due to the petroleum segment which expects refining margins to come under pressure with increased capacity from the start-up of new plants overseas.

Business outlook in the precision engineering cluster is also weak with a netweighted balance of 9 per cent of firms projecting a less favourable outlook, on the back of weak equipment spending and low demand for precision components.The electronics cluster is the least upbeat in the manufacturing sector. A netweighted balance of 28 per cent of electronics firms expect weak demand conditions to persist in the six months ahead amidst slow economic growth in Europe and US.

II     Output Forecast for January – March 2013

Compared to the fourth quarter of 2012, a net weighted balance of 10 per cent of manufacturers expects output to decline in the firstquarter of 2013.

The transport engineering cluster is the most positive, witha net weighted balance of 13 per cent of firms anticipating higher output in the first quarter of 2013 compared to a quarter ago.  All segments in the cluster project a higher level of activity in the next three months. In particular, the land segment expects higher production to meet delivery schedules.

The biomedical manufacturing cluster also projects increased output as there are plans to build up inventory in the pharmaceutical segment. In the general manufacturing industries cluster, higher output is expected in the food, beverages & tobacco segment to meet Lunar New Year demand.    

In contrast, the electronics, chemicals and precision engineering clusters forecast lower output in the first quarter of 2013 compared to a quarter ago in view of low demand arising from slow economic growth in Europe and US.  

III    Employment Forecast for January – March 2013

In terms of employment prospects, a weighted 85 per cent of manufacturers expect employment level in the first quarter of 2013 to remain similar to the fourth quarter of 2012. The transport engineering and the general manufacturing industries clusters are the most optimistic about employment opportunities in the three montОбувь