Singapore’s economic recovery has been patchy but recent data seems to suggest a growing optimism.
Companies in the service sector – which makes up two-thirds of the economy – are shaking off a deep cloud of gloom and anticipating more favourable business conditions in this half of the year, according to a new survey.
Also, bank lending rose 7.6 per cent year on year in June to reach $635.5 billion, the fastest pace of growth in more than two years as both business and consumer loans went up. Loans were higher for the ninth straight month, having notched year-on-year increases since October 2016.
OCBC economist Selena Ling said bank lending should hold up over the rest of the year, given improved business sentiment.
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“Moreover, while regional trade and economic activities may moderate in the second half after a stellar first half, regional manufacturing and services (numbers) do not suggest a sharp drop-off at this juncture,” she noted.
The latest labour market data from the Ministry of Manpower also showed that the overall unemployment rate was unchanged at 2.2 per cent and layoffs declined, “which should provide some support to consumer appetite for big-ticket items”, Ms Ling said.
These encouraging signs come as surging global demand for semiconductors and related equipment has helped fuel an export-driven boost to Singapore’s economy since the start of this year.
Bank lending rose 7.6 per cent year on year to reach this amount in June.
A survey of business expectations in the service sector found that a net weighted balance of 5 per cent of firms expect more favourable business conditions in this half of the year – up from a net weighted balance of negative 1 per cent in the previous quarter’s survey.
A survey of business expectations in the service sector, released yesterday by the Department of Statistics, found that a net weighted balance of 5 per cent of firms expect more favourable business conditions in this half, compared with the first six months of the year.
This was up from a net weighted balance of negative 1 per cent recorded in the previous quarter’s survey. It also comes after seven straight quarters of pessimism.
The net weighted balance is the difference between the percentage of firms that expect improvement and those that expect conditions to worsen. Individual responses are weighted by their contribution to employment and value added.
About 1,500 service companies across various sectors were polled.
Firms in food and beverage services, accommodation, business services (excluding real estate) and financial and insurance are upbeat about the outlook, the poll reported.
Some of this positive sentiment is likely due to the upcoming F1 night race in September as well as the year-end festive season, said Ms Ling.
Meanwhile, survey respondents from the transport and storage, real estate and retail sectors were less optimistic. The outlook is patchy even across the manufacturing sector, which has been a key driver of growth so far this year.
A separate survey of manufacturers, also released yesterday by the Economic Development Board (EDB), found that a net weighted balance of 4 per cent of manufacturers anticipate favourable business conditions in this half of the year, compared with the April to June quarter. Out of 429 manufacturing companies polled, 95 per cent responded to the survey.
The biomedical manufacturing cluster emerged as the most optimistic, with a net weighted balance of 14 per cent of firms anticipating the outlook to turn brighter.
This positive sentiment is mainly due to firms expecting more orders in the medical technology segment in the months ahead, EDB said.
The precision engineering and electronics clusters remain upbeat.
However, a net weighted balance of 2 per cent of transport engineering firms and 12 per cent of general manufacturing firms expect a less favourable operating environment in this half of the year.