The manufacturing sector expects business conditions to remain soft in the second half of 2019, amidst ongoing concerns over global trade tensions, the Singapore Economic Development Board has announced in its business expectations report.
A weighted 11 per cent of manufacturers anticipates business conditions to improve while a weighted 22 per cent foresees a softer business outlook.
Overall, a net weighted balance of 11 per cent of manufacturers predicts a less favourable business situation for the period July – December 2019, compared to the second quarter of 2019.
This is weaker than the net weighted balance of 7 per cent of firms which expected an improved business outlook in the same period last year.
Within the manufacturing sector, the biomedical manufacturing cluster is the most optimistic, with a net weighted balance of 17 per cent of firms anticipating improved business conditions in the second half of 2019, compared to a quarter ago. The optimistic outlook is largely supported by the pharmaceuticals segment which anticipates higher export demand for biological products.
By contrast, the chemicals, electronics, and precision engineering clusters are less optimistic about business prospects in the July – December 2019 period, compared to the preceding quarter.
The chemicals cluster is concerned about declining refining margins and weaker demand from the region, particularly China. In the electronics and precision engineering cluster, the weaker outlook is mainly due to the subdued demand for semiconductors and semiconductor-related equipment, as well as uncertainties arising from the US-China trade conflict that has broadened to the global technology sector.
Compared to the second quarter of 2019, a net weighted balance of 14 per cent of manufacturers expects output to decrease in the third quarter of 2019.
Within the manufacturing sector, the biomedical manufacturing cluster is the most optimistic, with a net weighted balance of 6 per cent of firms projecting a higher level of production in the third quarter of 2019, compared to a quarter ago. In particular, the pharmaceuticals segment anticipates increased production of biological products.
In the general manufacturing industries cluster, a net weighted balance of 4 per cent of firms projects an increase in output. This is mainly supported by the food, beverages & tobacco segment, which foresees increased demand in view of the Mid-Autumn festival in the third quarter of 2019. The miscellaneous segment predicts higher production of batteries as well as construction-related materials for public-sector projects.
In contrast, the chemicals, electronics and precision engineering clusters foresee a lower output level in the next three months. Within the chemicals cluster, firms expect export demand to soften in tandem with slower global economic growth. In addition, firms in the petroleum segment anticipate lower refining throughput in view of scheduled plant maintenance.
The precision engineering and electronics clusters expect lower output, on account of the lacklustre global semiconductor market, as well as the uncertainties surrounding the US-China technology conflict.