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Singapore business sentiment cools slightly for Q4

Singapore business sentiment cools slightly for Q4

Business sentiment in Singapore has cooled slightly for the fourth quarter of 2018, ending a run of three successive quarters of rising confidence.

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By Noah L. Wilson 13.09.2018

Business sentiment in Singapore has cooled slightly for the fourth quarter of 2018, ending a run of three successive quarters of rising confidence, according to the latest Commercial Credit Bureau’s Business Optimism Index.

Singapore’s business-focused quarterly index, released early this week, showed a +9.19 percentage point reading for Q4, which is down on the +10.58 percentage point reading for the previous quarter. While this represents a slight drop-off, Q3 did hit levels not seen in three years, and the index has soared +2.60 percentage points during the last 12 months.

The index offers a snapshot of business confidence among enterprise owners and senior executives in Singapore, with the reading providing a net percentage figure for the respondents who are expecting conditions to improve during the upcoming quarter year-over-year. In total, 200 people took part in this survey.

While the outlook has moderated slightly, expansion was still evident for the vast majority of indicators, including employment, sales volume, new orders and net profits. However, the selling price index did move into negative territory for the quarter after advancing by +4.5 percentage points for the period between July and September.

The third quarter was the high watermark for the year overall, as a number of higher indicators complemented the +10.58 reading. Only net profits and sales volume had higher readings for the fourth quarter, but the outlook is more robust compared to a year ago, as every indicator except selling prices were better for Q4 2018.

“We maintain our cautious stance on the outlook of local businesses in the coming months,” Singapore Commercial Credit Bureau CEO Audrey Chia noted. “This is due largely to the potential weakening of global trade flows and negative spillovers brought about by recent retaliatory tariffs between the US and China.”

In terms of sectors with the highest confidence, manufacturing and services lead the way, and all six indicators pointed to a positive outlook for the period. It appears that manufacturing sentiment has improved in recent months, as inventory levels, new orders, net profits and sales volume all saw an uptick compared to Q3. Services were optimistic, but most indicators were down on the previous quarter.

While manufacturing continues to thrive, construction has a more tempered outlook, with net profits and sales volume being the only two indicators in positive territory. Confidence in the transportation sector has also moderated quarter-over-quarter, with inventory levels and net profit among the indicators entering the red.

Chia added: "The construction sector will see sustained weakness for the rest of the year due to muted activities within the public building segment.”

In other Singaporean economic news, Enterprise Singapore (ESG) is on the lookout for investment partners after launching a new partnership scheme on Tuesday. The statutory board’s investment arm, Seeds Capital, wants co-partners to invest in the burgeoning agrifood tech market, where innovations are set to transform the food supply chain.

Seeds Capital is also eager for partners to help startups get off the ground and commercialize quickly as well as offer a platform for them to connect and engage with potential clients. The investment arm was set up to provide promising startups in Singapore with capital to boost the development of new products, processes and applications. 

ESG’s latest focus on food manufacturing dovetails with its plans to make Singapore an Asian leader in food and nutrition by the middle of the next decade, according to a statement released by the agency on Tuesday. Seeds Capital is set to co-invest an initial investment of $500,000 at a 7:3 ratio with a further $4m available for each “deep tech” micro business or startup.

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