Chart of the Day: Business outlook hits record low as SMEs' growth hopes vanish

Both the services and manufacturing sectors are mired in pessimism.

Business sentiment in Singapore has dipped to its lowest level in six years as firms grapple with slowing domestic growth and sluggish external demand, according to the latest Macroeconomic Review by the Monetary Authority of Singapore.

This chart shows that business sentiment has deteriorated sharply in both the manufacturing and services sectors. Latest surveys by the Economic Development Board (EDB) and the Department of Statistics (DOS) show that the general business outlook for manufacturing and services are at their lowest levels since Q1 2009 and Q4 2011m respectively.

Further, the employment outlook for the services sector is at a net weighted balance of −4%, one of the poorest readings since the Global Financial Crisis.

Meanwhile, a joint survey by the Singapore Business Federation and DP Information growth revealed that business sentiment is at its lowest level since 2010. The reading of the overall index showed that it had fallen to the neutral territory of 50.0, indicating that SMEs as a whole did not anticipate growth in Q2 to Q3 2016.

"Going forward, given the more downbeat external outlook, corporate margins could come under further strain in the near term. While the weakness in the outlook was mainly confined to the trade-related industries last year, it appears to have spread to other sectors in recent months,” the MAS said.