SINGAPORE (July 31): Positive business sentiment is on the uptrend among Singapore's manufacturers even with the ongoing US-China trade war, according to the Economic Development Board’s (EDB) Survey of Business Expectations of the Manufacturing Sector for 3Q18.

Compared to the EDB’s findings over 2Q, a net weighted balance of 5% of Singapore’s manufacturers are expecting output to increase in 3Q, with all clusters – save for chemicals – projecting higher output levels within the next three months.

General manufacturing appears the most optimistic on production prospects, with a net weighted balance of 20% of firms projecting increased output this quarter compared to 2Q.

Within this cluster, the food, beverages & tobacco segment anticipates higher production due to demand spikes arising from festivities. Meanwhile, the miscellaneous industries segment is anticipating higher output of batteries to meet export demand from Europe and US.

The precision engineering cluster’s net weighted cluster of 10% of firms expecting a 3Q output increase is mainly led by the precision modules & components segment, which foresees higher production of bonding wires, optical instruments, power cables and wires.

A net weighted balance of 9% of electronics firms foresee higher production levels in the months to come as the semiconductors and the other electronic modules & components segments are expecting a seasonal uptick in production.

The chemicals cluster is the only exception, with a net weighted 16% of firms projecting lower production levels in 3Q18, largely due to the petroleum and petrochemicals segments, which are expecting a fall in output due to scheduled plant maintenance.

It also expects business prospects to worsen in the next six months due to rising raw material costs, on the back of higher oil prices.

This is contrary to the general manufacturing sector sentiment, where a net weighted balance of 7% of all manufacturers surveyed anticipate a favourable business situation for 3Q18 compared to a quarter ago.

Notably, the transport engineering sector has turned more positive about the operating environment as the shipyards and aerospace segments look forward to more ship repairing work and strong demanding for aircraft engine repairs, respectively.

In the electronics cluster, semiconductors and other electronic modules & components project higher export orders for 2H18, although the infocomms & consumer electronics segment projects a weaker business situation in the months ahead.

Despite the overall optimism on manufacturing output and operating environment outlook, EDB’s survey findings reveal that a net weighted balance of 2% of manufacturers are planning to hire fewer workers compared to a quarter ago – especially among the electronics, transport engineering and general manufacturing  industries clusters, which expect to hire fewer workers over the July-Sept 2018 period.

While a majority of firms (a weighted 75%) in manufacturing reported no limiting factors that would affect their ability to obtain export orders in 3Q, a weighted 22% of firms have indicated price competition from overseas competitors, and economic & political conditions abroad, as the top two limiting factors that could affect export orders.