Local business confidence hits two-year peak

The Business Optimism Index's value rose by +4.29 ppt.

Local firms' business confidence hit a new peak in more than two years for the first quarter of 2018, the Singapore Commercial Credit Bureau (SCCB) revealed.

According to its Business Optimism Index (BOI), BOI rose from -1.22 ppt last year to +4.29 ppt this year.

The services sector emerged as the most optimistic sector with five of its indicators in the positive region. The majority of the remaining sectors such as manufacturing, construction, transportation, and wholesale are also relatively upbeat about the outlook for Q1 with four indicators each in the expansionary zone.

Compared to 2017, firms are more optimistic about investments in business expansion for 2018.

There is a moderate increase in the proportion of firms anticipating an increase in investments from 6% in 2017 to 9% in 2018.

Meanwhile, the proportion of firms expecting investments to decrease fell from 9% in 2017 to 4% for 2018. Majority of local firms had anticipated investments to remain unchanged at 86%.

SCCB said the top two most important areas of investment for 2018 are machinery and capital equipment at 35% and skills upgrading of employees at 34%. Meanwhile, investments in Information Technology are the third most important area of investment at 20%.

About 40% cited global economic uncertainties as their main challenge for 2018.

Compared to 2016, the proportion of firms which have identified higher business costs and increased competition has risen from 10% in 2017 to 28% in 2018 and from 4% in 2017 to 16% in 2018, respectively.