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I Business Sentiments for April - September 2008
1. A weighted 13 per cent of the manufacturing sector expects the business situation to improve for the period April to September 2008, while a weighted 20 per cent foresee less favorable conditions. This translates to a net weighted balance of 7 per cent of manufacturers expecting deterioration over the next two quarters, compared with the business situation in the first three months of 2008. A weighted 67 per cent of the manufacturing sector expects the general business situation for April to September 2008 to remain the same, giving a total weighted 80 per cent of firms expecting the outlook to improve or remain the same for the next six months, compared with the first quarter of the year.
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2. Sentiments in the general manufacturing cluster are the most upbeat, with a net weighted balance of 11 per cent of firms in the cluster expecting business to improve in the next six months ending September 2008, over the seasonally weaker first quarter. Manufacturers in this cluster supplying to the construction industry also expect demand to hold up. On the other hand, the biomedical manufacturing cluster has the weakest outlook for the same period. This is largely due to the pharmaceuticals segment, which anticipates a less active second and third quarter.
3. Based on the total weighted percentage of manufacturers which expect the business outlook in the next six months to improve or remain the same, the transport engineering cluster is the most positive. Shipyards’ order books remain strong, with rig builders expecting demand for oil rigs to increase in view of high oil prices, and both the ship repair and conversion market remaining favorable. Using the same measure, the biomedical manufacturing cluster also has the least optimistic outlook.
II Output Forecast for April - June 2008
4. Production activities for the second quarter of 2008 are expected to be similar to first quarter levels. Whilst output volumes of the electronics, general manufacturing, transport and precision engineering clusters are forecast to increase in the second quarter of the year, production in the biomedical manufacturing and chemicals clusters are expected to drop, compared with the previous quarter.
III Employment Forecast for April - June 2008
5. A net weighted 3 per cent of manufacturers expect to hire more workers in the second quarter of the year, compared with a quarter ago. The expected increase in employment can be largely attributed to the transport engineering cluster, which anticipates more rig building, ship repairing and conversion activity in the second quarter of the year.
IV Factors Affecting Export Orders for April - June 2008
6. Price competition from overseas competitors remains the most important factor limiting manufacturers’ ability to obtain export orders in the second quarter of 2008. This is expressed by a weighted 26 per cent of firms. Another weighted 7 per cent also cited the strong Singapore dollar, and political or economic conditions abroad as factors limiting their ability to accept more orders.
V Investment Plans for April 2008 – March 2009
7. A weighted 74 per cent of manufacturers plan to invest in plant and machinery in the period April 2008 to March 2009, compared with April 2007 to March 2008. Of these, a net weighted 9 per cent of manufacturers forecast a greater amount of investment. The main purpose of these investments is to replace worn-out equipment.
8. A weighted 77 per cent of manufacturers do not expect to incur capital expenditure on building in the next 12 months.
Editors' Note:
For further information on the business expectation results, please contact Ms Millie Lam (Tel: 6832-6031 / hp: 9740-7372 / Email: milliel@edb.gov.sg).
For media enquiry, please contact Mr Alex Tan (Tel: 6832-6284 / hp: 9841-0392 / Email: alex_tan@edb.gov.sg).
Updates on business expectations of the manufacturing sector for the second quarter of 2008 are available on http://www.sprinter.gov.sg and http://www.sedb.com
Technical Note
The Survey of Business Expectations of the Manufacturing Sector for the first quarter of 2008 was conducted in March to early April 2008 by the Economic Development Board. Out of a total of 392 manufacturing establishments surveyed, 95 per cent responded. These establishments were asked to indicate their expectation of general business conditions and other indicators such as output and employment. Their views are expressed in terms of directional change (i.e. “up”, “same” or “down). Individual responses provided by the establishments are weighted by their contribution to employment and value added. These responses are then aggregated at cluster, sub-cluster and overall manufacturing level, and presented in terms of weighted percentages.
The net weighted balance is commonly used to reflect the direction and extent of the business sentiments. It is the difference between the weighted percentage of 'up' responses and the weighted percentage of 'down' responses. For example, if weighted responses for overall manufacturing output yields a net weighted balance of +30 per cent, the plus sign before the percentage figure indicates a positive balance or net upward movement, and not a 30 per cent increase in output. Similarly, a minus sign before the percentage indicates a downward trend and not a decline by that amount. |
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