SME sentiment ticks up, ends seven straight quarters of escalating pessimism

Turnover and profitability expectations improved.

Small and medium enterprises grew slightly more upbeat on their business prospects for the next six months, according to the latest SBF-DP SME Index.

The Index measures the business sentiment of SMEs for the next six months and is a joint initiative of the Singapore Business Federation (SBF) and DP Information Group.

After hitting an all-time low of 50.0 in the last quarter, the overall index score rose to 51.9, buoyed by better turnover and profit expectations.

A score of 51.9 indicates SMEs are marginally optimistic about their growth prospects in the second half of the year and expect improvements in both their turnover and profits in the next six months.

On a year-on-year basis, however, the SME Index for 3Q16-4Q16 is the lowest since the index was started in 2009, said Ho Meng Kit, CEO of SBF.

"We note that on a historical basis, there tends to be an improvement in SME sentiments for 3Q and 4Q. This is likely to be due to seasonal effects of higher consumption expectations for the year end during the festive season. However, we remain cautiously optimistic in terms of our outlook. We are certainly not out of the woods yet,” he said.

More than 3,600 SMEs were surveyed between April and May 2016 on their outlook and sentiment.