Business expectations on all economic sectors for the following months fell dramatically, said the Department of Statistics and the Economic Development Board yesterday.
In the services market, which was expected to adjust for the manufacturing depression, 53 percent of the net weighted balance from surveyed firms expected conditions to be rough for the next six months, as compared to 15 percent in the previous survey. Between December and half of January, 1,400 enterprises were surveyed.
About 57 percent of the net weighted balance from over 400 polled firms were recorded in the manufacturing sector and expected conditions to be much worse, as compared to 28 percent in the past three months. The net weighted balance is known as the difference in the proportions of negative and positive responses, being weighted by the contributions to output and employment of firms.
Gwee Seng Kwong, secretary-general of Singapore Manufacturers’ Federation, said the results of the survey “came as no surprise”.
“No doubt the US has rolled out some economic stimulus that would help drive the global economy back to its proper order, but we do not expect the economy to recover by the end of 2009. This is because the implemented changes need time to take affect,” said Mr. Gwee.
Hotels are particularly gloomy in the services sector, with all polled saying they expected viewpoint to worsen. The retail trade, transport and storage, and financial services industries were also dull, with at least 60 percent net weighted balances.
The polls revealed that the employment and output levels on all sectors were also expected to fall, even if better jobs creation was shown in the employment data that was released yesterday.
An estimated 29 percent of manufacturers anticipate a headcount reduction in this quarter, with the electronics and precision engineering group particularly bearish, said the Economic Development Board. About 70 percent expect the employment in factories to still be stable. In the services sector, hotels and catering are expected to have the largest cuts in jobs, with over 30 percent net weighted balance. However, real estate, and business and financial services firms remain confidently optimistic, with less than 20 percent net weighted balance expecting less employment.
Kit Wei Zheng, economist of Citi said, “We expect net jobs creation will turn negative within the next one to two quarters, likely peaking somewhere in H2 2009. Manufacturing will likely bear the brunt of the job losses, with financial services, real estate and other services sectors also expected to lose jobs.”
Teng Theng Dar, chief executive of Singapore Business Federation, said that the government’s pump priming would improve certain sectors. Expanding to other industry sectors should help protect companies from the economic slowdown in G3 countries. ”Economies like China, the (Gulf Cooperation Council countries), Vietnam and Latin America hold prospects for trade and investment opportunities for Singapore companies in sectors such as infrastructure development and upgrading, education and training, ICT and clean energy,” Mr. Teng said.