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FEARS of a recession in the United States and other markets have cast a pall over the Singapore manufacturing sector's outlook for the first half of this year, a quarterly government survey has shown.
Significantly more companies polled in the past two months expect business conditions to deteriorate.
On a more positive note, the number of companies that expect production to rise in the first quarter still outweigh those who anticipate a cutting- back of output.
There are already signs of a bleaker outlook for the local manufacturing sector, with the Economic Development Board (EDB) data published last week showing that factories in Singapore had slowed more than expected last month.
Industrial output shrank by 1.7 per cent, a bigger slide than the 0.5 per cent contraction in November, led by a drop in drug production and shrinking electronics growth.
Manufacturers who were upbeat about business conditions barely outnumbered those who had bad vibes about the coming months.
After the 8 per cent who were pessimistic had been subtracted, a net weighted balance of just 2 per cent of manufacturers projected better business conditions, said EDB yesterday in its poll of about 390 manufacturers.
This is much weaker than the net weighted balance of 7 per cent recorded in the first quarter of the previous year.
It was also much lower than the net weighted balance of 25 per cent of manufacturers who held an optimistic outlook during the previous survey of business conditions between October last year and March this year.
With competition exerting more pressure on the electronics sector and demand for electronic goods expected to cool off now that the year-end festive season has ended, the sentiments of electronics makers were muted.
A net weighted balance of 1 per cent expected an upturn.
Nonetheless, the employment outlook is more sanguine, with a net weighted 18 per cent of companies looking to hire more workers in the next three months.
Gloom dominated in the precision engineering cluster, where a net weighted balance of 8 per cent of companies were bearish in anticipation of a seasonal slowdown, a fluctuating US dollar and rising raw materials costs.
The outlook of chemical sector companies remained largely unchanged for the first half of this year, compared with the previous quarter. But some bright spots for these companies are improving regional export markets and robust demand from the construction industry.
Similarly, biomedical manufacturing companies remained unchanged in their expectations as they saw output rising, as well as finished goods stocks earmarked for export next year.
graceng@sph.com.sg
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