Singapore SMEs business optimism hits 3-year high

But hiring expectations weakened.

Singapore’s SMEs expect to start 2014 on a bright note, with business optimism at its highest level in three years.

This is the key finding of the latest SBF-DP SME Index, a joint initiative of the Singapore Business Federation (SBF) and DP Information Group (DP Info). It is a six months forward-looking Index which measures the sentiments of SMEs.

The current Index tracks SME sentiments for January to June 2014 and is based on 3,000 interviews with SME owners and managers, and the financial performance of SMEs. Five industry sectors are tracked – Business Services, Commerce/Trading, Construction/Engineering, Manufacturing, and Transport/Storage.

The Overall Index for this quarter rose 0.5 per cent to 55.0 - the highest score since Q3 of 2011. A score above 50 per cent indicates that SMEs have a positive outlook for their business prospects for the next six months.

The Construction/Engineering sector was the only industry which had moderated expectations, from 57.4 in the last quarter to 55.3 for the first half of the new year. This demonstrates that the Construction/Engineering SMEs expect a slight temperance of their business expectations, on the back of comparatively fewer private sector activities anticipated in 2014.

Key indicators measured by the Index improved, with the exception of hiring intentions which declined, and capital investment which remained stable. Hiring expectations fell from 5.69 last quarter to 5.55 this quarter. Ms Chen Yew Nah, Managing Director of DP Information Group said, “SMEs expect the global economy to continue to grow, albeit at a modest pace.”

“They expect their sales and profits to improve and their businesses to expand during the next six months.”