Chart of the Day: Check out why local businesses a tad more upbeat in Q3

Strong domestic industries are key.

Local businesses are a tad more upbeat about their growth prospects in the third quarter, according to this graph from the Singapore Commercial Credit Bureau.

According to the latest quarterly Business Optimism Index (BOI) study, local BOI displayed
further signs of improvement for the second consecutive quarter, rising from +9.0 percentage points in Q2 2015 to +14.60 percentage points in Q3.

The latest BOI reading marks a return of optimism to similar levels experienced in the same quarter last year. On a year-on-year (y-o-y) basis, BOI fell marginally from +14.65 percentage points in the same quarter last year to +14.60 percentage points in Q3 2015.

“On the overall, business sentiments have improved markedly in Q3 2015 following the previous quarter’s rebound from the near-contractionary BOI reading seen in Q1 2015. For the first time in three quarters, the BOI reading has risen above the 10 percentage point mark. While external headwinds in the recent quarter continue to weigh on investor confidence, the resilient performance by the more domestically-oriented sectors such as construction and certain segments of the services sector has likely bolstered business sentiments here,” said Audrey Chia, SCCB’s Chief Executive Officer.

“However, there is still a sense of cautious optimism for Q3. While sales are projected to increase in anticipation of a rise in demand, profit margins have remained constrained by upward cost pressures and sustained moderation in selling prices over the past year. It is one thing for firms to be effective in generating sales and quite another for firms to be achieving optimal operating efficiencies and keeping a healthy bottomline. Hence, it would still be premature to tell if the local economy is poised for a sustained optimism for the rest of the year,” she added.