Electronics firms to stay upbeat in the next six months

Optimism is largely led by the semiconductors segment.

Around 70% of the firms in the manufacturing sector sees business situation in the next six months ending to remain similar to a quarter ago. A weighted 17 % of manufacturers expects business conditions to improve while a weighted 13 % projects a deteriorating business outlook. Overall, a net weighted balance of 4 % of manufacturers expects a more favourable business situation for the period October 2016 – March 2017, compared to the third quarter of 2016.

According to the Economic Development Board (EDB), the electronics cluster is the most optimistic in the next six months , with a net weighted balance of 25 % of firms anticipating improved business conditions ahead. EDB noted that this optimism "is largely led by the semiconductors segment, in view of the seasonal pick-up in demand for chips."

However, the computer peripherals and infocomms & consumer electronics segments expect business situation to deteriorate compared to the preceding quarter.

Meanwhile, EDB noted that the biomedical manufacturing cluster, a net weighted balance of 5 % of firms projects business situation to improve. The pharmaceutical segment expects export demand to remain strong while majority of firms in the medical technology segment anticipates sustained demand for medical devices over the next six months.

For precision engineering cluster, firms anticipate a similar business condition in the six months ahead. Within the cluster, the machinery & systems segment foresees better business prospects in semiconductor related equipment. On the other hand, the precision modules & components segment expects business situation to deteriorate, in particular the wire & cable and industrial rubber products industries.

EDB also revealed that in the transport engineering cluster, a net weighted balance of 5 % of firms foresees business outlook to worsen. The firm noted that this is largely due to the
marine and offshore engineering segment as offshore exploration and drilling activities are expected to remain lackluster in the months ahead.

The board also reported that a net weighted balance of 9 % of firms in the chemical cluster expects business prospects to weaken.

"The weak outlook is broad-based with all segments within the cluster foreseeing a decline in business activity. The petroleum segment continues to be concerned with weak refining margins while the petrochemicals and specialties segments anticipate a slowdown in business activities ahead due to seasonal factors," EDB argued.

It furthered, "The general manufacturing industries cluster is the least optimistic, with a net weighted balance of 12 % of firms expecting a less favorable outlook in the six months ahead. While firms in the food, beverage & tobacco segments expect business conditions to improve due to higher festive orders, the printing and miscellaneous industries segments foresee weaker business prospects ahead. The miscellaneous industries segment anticipates softer business condition due to lower demand for construction related materials."