As per a quarterly business expectations survey by the Economic Development Board (EDB), local manufacturers remain slightly optimistic about their business prospects, while pessimism among firms in the services sector has deepened in the first half of this year.
Within the manufacturing sector, weighted 76 per cent, firms making electronics are the most optimistic, with a net weighted balance of 26 per cent upbeat about prospects.
Whereas, firms in infocomms and consumer electronics expect business to deteriorate compared with the previous quarter, shows the survey.
The general manufacturing cluster is the most downcast, with a net weighted balance of 29 per cent of firms expecting conditions to worsen.
In particular, the slowdown in construction activity is expected to hurt demand for a wide range of building materials.
Song Seng Wun, CIMB Private Bank Economist said, “It is a mixed bag, with certain sectors looking more optimistic against the growth in export demand. Also, given the low base, the factory output growth may look comforting but it may not necessarily translate into a pick-up in hiring as businesses continue to be cautious and will wait for their order book positions to improve further … The actual impact of external demand growth is yet to spill over the broader economy.”
With a net weighted balance of 14 per cent of firms expecting conditions to worsen in the first half of this year compared with the second half of last year, the business outlook has deteriorated in the services sector.
The accommodation segment is the most pessimistic within the services sector.
Michael Wan, Credit Suisse economist said, “A lot depends on the global outlook and the policy stance by United States President Donald Trump. If the past seven days are anything to go by, the outlook remains volatile, while the proposed infrastructure spending in the US remains doubtful.”
“On the other side, it is true that China has been resilient but the concerns remain, given its capital control measures and the tightening of its property markets, he added.