By Amanda Lee and Fabiana Negrin Ochoa
SINGAPORE--Sentiment among businesses in Singapore remains broadly upbeat despite headwinds, with optimism in manufacturing and services sectors flashing positive signs about the city-state's economic prospects.
A weighted 25% of manufacturers expect business conditions to improve from April to September, while a weighted 3% foresee a weaker business outlook, the Singapore Economic Development Board said Tuesday.
That's more positive than the past survey, where 11% said they saw a weaker outlook over January-June.
"A net weighted balance of 22% of manufacturing firms anticipate a favourable business situation for the period April-September," the EDB said.
A net weighted balance is used to indicate the likely overall direction of and sentiment in a particular industry.
The pickup was seen across the manufacturing sector, with electronics firms the most optimistic, the EDB said. Firms that make semiconductors and other electronic modules & components are especially upbeat thanks to improved demand for consumer electronics and strong artificial-intelligence server demand, which boosts orders for memory and other chips.
Precision engineering, transport engineering and general manufacturing industries see output rising in the second quarter, while the rest of the sectors expect declines, the data showed.
A majority of firms expect employment levels to stay steady in the second quarter.
The bulk of manufacturers don't expect factors hinder export orders in the second quarter. Those who do cited price competition from overseas, inflationary pressures and geopolitical tensions.
A separate release by the Singapore Department of Statistics showed that business expectations among firms in the services sector stayed positive for the period of April to September.
According to the data, 16% of firms are upbeat about business conditions while 9% of firms foresee deterioration.
"Business expectations for manufacturing and services firms remain supportive," said Selena Ling, chief economist and head of global markets research & strategy at OCBC.
She highlights that 52% of manufacturers plan to invest in plant and machinery over the 12 months from April 2024 to March 2025, with 40% tipping a similar or higher capital expenditure.
Within services, the most positive firms were in accommodation due to expected higher occupancy rates amid various big-ticket events, Ling said in a note.
The data comes after the Ministry of Manpower issued advanced estimates of the city-state's employment numbers for the first quarter. Total employment, excluding migrant domestic workers, continued growing but at a slower pace, while unemployment stayed steady.
Singapore's labor market looks very stable despite expectations that it will cool through the year, Ling reckons.
Employers' intention to hire and raise wage suggests gross domestic product growth prospects--and in turn labor demand conditions--should stay supported this year, Ling said, despite headwinds from high-for-longer global interest rates and a soft Chinese economy.
Write to Amanda Lee at amanda.lee@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
04-30-24 0601ET
