Business optimism among SMEs hits two-year low in 2H15

Confidence declined for three straight quarters.

Small and medium enterprises (SMEs) are less upbeat about their business prospects in the third and fourth quarters of 2015, according to the latest SME Index released by the Singapore Business Federation and DP Information Group.

The overall Index showed a score of 53.5, down 0.9% quarter-on-quarter. This marks the third straight quarter of declining confidence as well as the lowest reading since the start of 2013.

Four of the six industries included in the Index – Commerce/Trading, Manufacturing, Retail/F&B, and Transport/Storage – are all less optimistic than they were three months ago.

Outlook remained flat for companies in the Business Services industry, while the construction sector bucked the trend with a slight increase in its Index Score from 53.6 to 54.0. 

“There has been a steady decline in business sentiments of our SMEs over the last three quarters, though this drop in sentiment is not alarming. It reflects the uncertainty in the global economy and the tough business environment locally. This latest survey, coupled with other findings such as the lower forecast for Singapore 2015 GDP growth and the contraction in overall employment in the first quarter of this year after five years of sustained growth, could be signs that the economy is reacting to our economic restructuring policies. This situation merits closer monitoring to avoid us slipping into economic difficulties,” said Ho Meng Kit, CEO of SBF.