Business conditions in services sector to get worse in H1 2020: survey

Accommodation, retail and F&B industries are expecting lower demand.

Companies in the services sector have a negative outlook on business conditions in H1 2020, according to a report by the Department of Statistics (SingStat). Fourteen percent of these firms said that they will likely see slower business operations, whilst 12% of firms remain optimistic.

This resulted in a net weighted balance of 2% of firms showing a less favourable business outlook for the same period H1. Whilst this is weaker than the outlook for the period October 2019–March 2020 (net weighted balance of +1%), it is an improvement compared to H1 2019 which recorded a net weighted balance of -4%.

Amongst sectors, the financial & insurance, information & communications and recreation, community & personal services industries are those expecting improvements in H1 compared to H2 2019, whilst the accommodation, retail trade and food & beverage (F&B) services industries are less positive.

Firms in the wholesale trade industry are also projecting worse business conditions over the same period as wholesalers of machinery & equipment brace for lower demand.

As for operating receipts, firms posted a net weighted balance of 3% of firms as they are also expecting operating receipts to fall in H1. Businesses are also expecting hiring to remain at a similar level in the same period, compared to Q4 with a net weighted balance of 1%.

In particular, real estate companies expressed plans to increase hiring in Q1 2020 as they are expecting to see heightened demand.

Likewise, the recreation, community & personal services industry expects employment to increase, especially for firms engaged in health and childcare services.

Conversely, firms in the accommodation and food & beverage services industries expect to hire less for the period of Jan – Mar 2020.