The overall business sentiment among Singaporean firms remains pessimistic in 4Q20, according to the Singapore Commercial Credit Bureau (SCCB)’s latest report released on September 8.

According to the SCCB’s Business Optimism Index (BOI) study, the Singapore BOI remained negative, although it registered a slight q-o-q improvement of -4.97 percentage points in 4Q20, compared to the -5.16 percentage points in 3Q20.

On a y-o-y basis, however, the BOI for 4Q20 took a nosedive, compared to the +4.82 percentage points in 4Q19.

The BOI, which is released quarterly, is a measure of business confidence in the economy. The index polls some 200 business owners and senior executives and tracks how the business community perceives the environment and where they think it is moving.

According to SCCB, three out of six indicators experienced declines this quarter from 3Q20, which are selling price, inventory levels, and employment levels, which fell 7.78 percentage points, 5.44 percentage points, and 9.9 percentage points respectively.

Year-on-year, five out of six indicators – volume of sales, net profits, selling price, inventory levels, and employment levels – deteriorated in 4Q20.

Employment levels took the biggest hit as it plunged 27.63 percentage points y-o-y to -13.19 percentage points in 4Q20 from +14.44 percentage points in 4Q19.

Sector-wise, the financial, manufacturing, and services sectors improved slightly, each with three out of six indicators in positive territory.

The construction and transportation sectors were relatively downbeat with five and four indicators in negative territory, respectively.

Volume of sales for the quarter increased to -1.11 percentage points from -3.33 percentage points in 3Q20. Volume of sales for the financial, manufacturing, and services sectors were most upbeat at net +33.33 percentage points, +11.76 percentage points, and +18.75 percentage points, respectively.

The mining, construction, agriculture, and wholesale sectors were the most downbeat at net -100.0 percentage points, net -80.0 percentage points, net -50.5 percentage points, and -17.65 percentage points respectively.

Net profit inched up to -5.56 percentage points from -8.89 percentage points in 3Q20. This was led by the financial, services, and manufacturing sectors, while the mining, construction, agriculture, transportation, and wholesale made the bottom few on the list.

Inventory, selling price, and employment levels fell overall in 4Q20 while new orders rose q-o-q.

“On the overall, business sentiments in Singapore are expected to remain downbeat for the final quarter of 2020. With heightened global geo-political tensions, a protracted re-opening of international borders and delayed resumption in activities locally for certain sectors such as construction, there are still no clear prospects of recovery in sight within the short-term,” says Audrey Chia, SCCB’s CEO.

“However, we are seeing pockets of strength in certain sectors such as the professional and IT services, manufacturing and financial services sectors which have all anticipated a slightly better outlook as compared to 3Q20,” Chia added.

“As COVID-19 has accelerated the digital transformation among local firms, businesses which have been able to pivot their business models were better able to shore up their operations quickly to keep their businesses going during these challenging times.”