Singapore’s manufacturing and services sectors have shown a slightly more positive outlook for the next six months, according to separate quarterly surveys published on October 31, 2023. A net weighted balance of 7% of manufacturers expressed optimism about their business prospects from October to March, an increase from the previous quarter’s 6%. This marks the third consecutive quarter of positive sentiment after three quarters of pessimism.

In the services sector, a net weighted balance of 9% of firms are optimistic about business conditions, up from 8% in the last survey. This balance reflects the difference between the weighted shares of positive and negative responses, indicating overall optimism.

Among manufacturers, 19% expect improved conditions, while 12% anticipate worsening circumstances. However, despite this optimistic sentiment, a net weighted balance of 10% of manufacturers expect lower output in the fourth quarter, compared to 6% expecting higher output in the previous quarter.

Economists have mixed expectations regarding the manufacturing sector’s recovery. DBS economist Chua Han Teng anticipates gradual recovery in the coming months, while Maybank’s Chua Hak Bin projects modest recovery for 2024. Nonetheless, challenges remain, including high interest rates in advanced economies and ongoing geopolitical tensions, which could hinder recovery.

Positive sentiment varied across different manufacturing clusters, with transport engineering being the most optimistic due to demand from the oil, gas, and renewable energy sectors. The aerospace segment also benefited from strong global air travel demand. The electronics cluster showed the highest net weighted positive balance since September 2021, primarily driven by the semiconductor segment.

On the other hand, the chemical and biomedical manufacturing sectors expressed concerns about weak regional demand and high operating costs. The biomedical sector anticipates a decline in demand for life science instruments due to the current macroeconomic outlook.

In the services sector, 18% of firms are optimistic about business conditions from October to March, while 9% expect deterioration. Almost all industries reported positive sentiments, particularly in accommodation, where hoteliers are optimistic about increased tourism during the year-end festivities. Retail and food and beverage services also expect sales increases due to holiday celebrations.

Chua noted a modestly net positive shift in the wholesale trade sector after several previous negative assessments, suggesting a potential gradual recovery linked to improved world merchandise trade in 2024.

Overall, the services sector maintains a net weighted balance of 10% of firms anticipating higher revenues in the last quarter of the year, with all industries projecting growth. In terms of hiring, all sectors expect to increase hiring activities in Q4, with a net weighted balance of 12% foreseeing an uptick in employment compared to 9% in Q3.