Business optimism hits 3-year highs in Q3

The services and manufacturing sectors are the most bullish.

The business sentiment amongst local firms soared at 10.58% YOY from 3.58% in Q3, representing a near 3-year high, according to the Business Optimism Index study conducted by the Singapore Commercial Credit Bureau (SCCB).

According to SCCB, six indicators have improved on a YoY basis including the volume of sales which jumped 10% from 5%, net profits that rose 7.50% from 5%, selling price that rallied to 4.5%, new orders up 16%, inventory levels that significantly increased from 2.5% to 16.5%, and employment levels that rose 9.0%

The bureau also found out that services and manufacturing sectors were hailed as the most optimistic sectors in terms of the six indicators.

“This was due largely to an uptick in activities within the business services, recreational, and social services sub-sectors,” SCCB said.

Overall sentiment within the manufacturing sector also improved on the back of robust growth within the precision engineering and chemicals sub-segments.

“The rise in optimism amongst the business community should come as no surprise given that the growth rates have remained steady in the first half of 2018. This is particularly the case for domestic-oriented industries such as services and manufacturing,” SCCB CEO Audrey Chia explained.

Also read: Has Singapore's manufacturing sector already peaked in Q1?

Aside from the two sectors, the study also found a positive outlook for the transportation, financial services, construction, and wholesale sectors.

Despite the overall positive outlook, Chia said that some risks and uncertainties may arise due to rising trade tensions.

“Sentiments amongst firms in wholesale trade have slipped for the next quarter. Hence, we would take a cautious stance on the outlook in the near-term,” she added, 

The Ministry of Trade and Industry (MTI) has narrowed its GDP growth forecast for 2018 to be between 2.5 to 3.5 %. 

Released quarterly, the SCCB BOI is based on business sentiment survey designed to capture business expectations through tracking business parameters including net profits, selling prices, new orders, inventory levels, and employee count.