Businesses see dark clouds ahead; Three new surveys forecast gloomy days for most sectors

Melissa Tan

FIRMS in Singapore have turned decidedly gloomy about the business outlook.

Three newly released surveys suggest darker days ahead across most sectors as deteriorating global conditions continue to hobble the local economy.

A survey conducted by the Economic Development Board (EDB) found that manufacturers are expecting business conditions to worsen over the next six months through till March next year.

In all, 17 per cent of manufacturers expect things to get worse, a figure which exceeds their more upbeat peers by 10 percentage points, the EDB said yesterday.

The numbers are weighted according to 'contribution to employment and value added', EDB said.

This dovetails with the results of the D&B Business Optimism Index survey, also released yesterday, which found that businesses in Singapore are generally gloomier about the fourth quarter.

'Singapore's economy has been undermined by softening global market conditions weighed down particularly by currency volatility and weaker global demand,' said business information firm D&B in a statement.

'Closer to home, recent floods in Thailand have further dampened hopes of economic growth within the region.'

In the EDB survey, the gloomiest factory operators were those hit hardest by the global economic slowdown, such as electronics and precision engineering.

For both these clusters, the portion of firms with a pessimistic outlook exceeded the number of optimistic ones by a net weighted balance of about 20 percentage points.

UST Technology, which makes equipment and related products for micro-electronics companies, is among the doomsayers.

'I don't see any recovery in the next six months, and it will definitely worsen in November and December,' said chief financial officer Lee Yoke Keng.

'We're closed for a week in the last week of December, and also shut down every other Friday,' she said, adding that the firm was not replacing workers who had resigned.

She added that the floods in Thailand were a 'double blow'.

'My customers in Thailand, the semiconductor plants, are all shut and are not going to open until January due to massive damage to their plants. It will take time to clean up. All my orders have been pushed back.'

Mrs Lee said that the situation was not merely like a 'little flu where you just have some rest and you'll be fine, no need for medication'.

'There's no visibility, and for my Thai customers, we don't even know where they're headed. It's very difficult for us.'

The dampening of sentiment is not confined to electronics and precision engineering. The EDB survey found that 'all clusters in the manufacturing sector are more pessimistic in their outlook'.

Manufacturing output for the current fourth quarter is also expected to slacken compared to the third quarter.

The only bright spots within the manufacturing sector are the marine and offshore engineering, aerospace and land transport segments, the EDB survey found.

To make matters worse, the service sector, which accounts for around two-thirds of the economy, is also downbeat, according to a Business Expectations Survey conducted by the Department of Statistics.

It found that overall, the portion of pessimistic firms was a weighted 25 per cent, which exceeded the proportion of optimistic firms by a net weighted balance of 9 percentage points.

But there were a few notable exceptions - retailers, hotels and food and beverage firms see brighter prospects.

'For the next three months it should be good still because the year-end is coming with the festive season,' said Ms Yvone Lim, managing director of halal Japanese noodle restaurant Ramen Ten.

'Usually, after Chinese New Year, it's a slow period, so it's quite expected for F&B to slow down, but I'd think that for the mass market, people still need to come out and dine. After six months we wouldn't know, we would have to play it by ear.'


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