Singapore business confidence plummeted to 1-year low in Q4

Firms are more cautious as global uncertainties intensify.

Local business confidence crashed to a 1-year low in the final quarter of the year, as intensifying geopolitical uncertainties cast a pall over domestic businesses.

According to the Singapore Commercial Credit Bureau’s latest quarterly Business Optimism Index, overall BOI score declined further in Q4 to +10.79 percentage points, plummeting sharply from +33.98 percentage points in the same quarter last year.

This also marks the lowest BOI score registered in a year since Q3 2013 when BOI posted +10.53 percentage points. Only 5 of six business indicators have remained in the expansionary region in Q4 2014.

This stands in contrast to the previous quarter when all six business indicators were in the expansionary region.

According to Audrey Chia, SCCB’s Chief Executive Officer, “We are seeing a return of business optimism back to similar levels experienced in both second and third quarter last year when BOI score was marginally positive. Recent market volatilities and political instability in various parts of the world have weighed on the sentiments of local firms with sizeable global and regional footprints. On the other hand, we have the domestically-oriented SMEs and small business owners who continue to contend with rising cost pressures and manpower issues.” 

“However, the situation is not all that bleak. While growth within certain sectors such as services and manufacturing have remained subdued, optimism levels within the financial and wholesale trade sectors have made marked improvements. This is likely attributed to the strong performance of the financial intermediation cluster and a turnaround in regional tradeflows,” she added.

Here’s more from the SCCB:

Both wholesale and construction sectors ranked atop as the most optimistic sectors with at least five business indicators in the expansionary region.

Meanwhile, the services industry took a tumble from the top with all five business indicators moderating downwards. Business sentiments among manufacturers also remain weak with new orders declining into the contractionary region for the first time since Q1 2012.

Compared to a year ago, overall BOI score plummeted sharply from +33.98 percentage points in the same quarter last year to +10.79 percentage points in Q4 2014.

The SCCB Business Optimism Index (BOI) is a measure of business confidence in the economy. Released quarterly, it is based on a business sentiment survey that is designed to capture business expectations and is one of the most effective ways to track how the business community perceives the business environment, and where they think it is moving.

This is commonly used, worldwide, to assist in analyzing major trends and issues concerning the business community through tracking business parameters including net profits, selling prices, new orders, inventory levels, and employee count.