Gradual economic recovery in the US and Europe fuel hope of business looking up in April-September period, reports Team IFM
Singapore, May 2: Local manufacturers, enthused by the ongoing economic recovery in the US and Europe, believe the next six months will usher in a period of good fortune for them, an official statement released on Wednesday showed.
The statement by the Singapore’s Economic Development Board comes on the heels of an independent report by Janus Corporate Solutions, a Singapore-based corporate services firm, which spoke of continuing interest shown by foreign investors and enterprises to set up business operations in Singapore.
Data culled by the Economic Board also showed layoff shrinking, reflecting further the enhanced business confidence stemming from hopes of new orders.
“Business sentiments in the manufacturing sector is expected to be positive in the next six months ending September 2014, on the back of improved economic conditions in the US and Europe,” the Board said. “All, except the chemicals cluster, expect higher output levels.”
Overall, it said, a weighted 12 percent of manufacturers expect business conditions to improve while a weighted 5 percent foresees deterioration.
“This resulted in a net weighted balance of 7 percent of manufacturers expecting a favourable business situation for the period April-September 2014 period, as compared to the first quarter of 2014.”
The Board’s data was in line with the First Quarter Business Formation Report released on Monday by Janus Solutions, which spoke of “an extremely busy business scene in Singapore”.
According to Janus, the first quarter saw 16,190 new businesses being formed, reflecting an increase of 14.4 percent against the first quarter business formations in the preceding year.
The robust growth in numbers echoes the gradual recovery of the western market and the local market’s surging confidence, the company said.
“The significant growth, both in terms of Q-on-Q and Y-on-Y, is in line with the gradual recovery of the global economy,” said Jacqueline Low, Chief Operating Officer of Janus Corporate Solutions, in a statement.
“The west is reversing its recessionary trend, and though marginal, the recovery is sustained and there are signs of continued growth,” she said.
“This recovery has increased the confidence of investors and entrepreneurs, which is evident from the sharp rise in the number of new businesses formed in the first quarter of the year.”
OPTIMISTIC LOT
Within the manufacturing sector, the precision engineering cluster is the most optimistic, the government said.
A net weighted balance of 24 percent of firms expect better business prospects in the six months ending September 30, compared to the January-March quarter, the official data showed.
Similarly, it said, the machinery and system segment has projected higher orders for semiconductor-related equipment “on account of better demand in the global semiconductor market and improved economic conditions in the US and Europe”.
The precision modules and components segment also foresees more orders from both local and overseas markets in the six months ahead, the Economic Development Board said.
General manufacturing industries is the next most optimistic with a net weighted balance of 7 percent of firms anticipating better business prospects in the six months ending September 2014. Within the cluster, the Board said, the printing segment believes business will pick up.
This follows a seasonally less active first quarter of the year.
In the miscellaneous industry segment, positive sentiments are supported by firms engaging in construction materials and battery production.
For the electronics cluster, a net weighted balance of 4 percent of firms expects business conditions to pick up for the April-September period.
Calling it “a turnaround” from the preceding quarter, the Board said the “optimistic outlook is mainly led by the semiconductor segment, which expects increased orders, especially for chips used in smart phones and tablets”.
On the other hand, it said, the chemicals cluster is the least upbeat about business conditions in the six months ending September as compared to a quarter-ago period.
Overall, it said, a net weighted balance of 1 per cent of firms projects a less favourable business situation. “This weak sentiment is largely attributed to the petroleum refining segment which expects refining margins to remain soft in the months ahead.”
OVERSEAS LEG-UP
Janus Corporate Solutions, which has reported an extremely busy business scene in Singapore in the first quarter, said the increased levels of confidence and business activity could be attributed to positive developments in the US and Europe.
“Singapore, with its strong business friendly fundamentals and its strategic location amidst the burgeoning Asian markets, continues to attract foreign investors and enterprises to set up business operations in Singapore,” it said in its First Quarter Business Formation Report.
“There is a sharp spike in the number of private limited company registrations where it has increased by 10 percent in Q1 2014 against the previous quarter,” the company said in a statement.
Janus said the year-on-year growth rate of company formation was also significantly higher at 11.1 percent, with 32 percent of the new business formed in the first quarter boating of foreign shareholders, “fortifying the strong reputation of Singapore as an efficient regional hub for international businesses”.
Although the share of business with foreign shareholders has declined marginally, it has recorded a significant rise in terms of absolute numbers, Janus said.
It also said while new business formations continue to be predominantly from wholesale trade and financial services sectors, the new business formations in IT and the retail sector have registered a marginal growth in their shares.
“The government’s drive to promote productivity and innovation appears to fuel the growth in the IT sector, and the strong domestic spending of the consumers buoys the retail sector,” it noted.
Janus COO Jacqueline Low referred to the “gradual recovery” of the global economy, saying the west is reversing its recessionary trend, and though marginal, the recovery is sustained and there are signs of continued growth.
“This recovery has increased the confidence of investors and entrepreneurs, which is evident from the sharp rise in the number of new businesses formed in the first quarter of the year,” Low said.
“Barring any inclement economic turmoil, we remain very positive for the rest of the year.”