The manufacturing sector expects business conditions to improve in the next six months – from April to September – amid the raised global economic prospects due to the ongoing Covid-19 vaccinations happening around the world.

The figures were released on April 30 by the Singapore Economic Development Board (EDB Singapore).

A weighted 41% of manufacturers anticipate conditions to improve while a weighted 3% foresee a weaker outlook.

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Overall, a net weighted balance of 38% of manufacturing firms anticipate a favourable business situation for the coming six months, compared to the 1Q2021.

Within the sector, the positive outlook is led by the electronics cluster with a net weighted balance of 66% of firms expecting a positive business outlook till September.

The sentiment is largely driven by the semiconductors and other electronic components segments as they project higher export orders due to robust demand from 5G markets.

This is followed by a net weighted balance of 32% of firms in the biomedical manufacturing cluster due to higher overseas orders in the pharmaceutical and medical technology segments.

The precision engineering and transport engineering clusters round up the bottom with only 19% and 18% of firms respectively anticipating a positive outlook for the next six months.

The precision engineering cluster foresees robust orders and deliveries for semiconductor-related equipment while the transport engineering cluster estimates a pick-up in automotive parts for the land segment, and in aircraft engine repair for the aerospace segment.

The marine and offshore engineering segment, in contrast, continues to anticipate weak demand amid the gradual recovery from the plunge in oil prices in 2020.

SEE:Singapore's GDP growth to exceed 6% in 2021; Covid-19 impact on economies weakens

As we move into the 2Q2021, a net weighted balance of 28% of manufacturers expect output to increase. All clusters except the general manufacturing cluster estimate higher output levels in the next three months ended June.

A net weighted balance of 5% of firms in the general manufacturing industries cluster estimate a lower output level in the 2Q2021 due to lower output of beverage and milk products. The printing segment continues to project fewer print jobs ahead.

The biomedical cluster is the most positive on its outlook growth with a net weighted balance of 53% firms expecting production levels to increase in the 2Q2021.

This is followed by the electronics and precision engineering clusters, where a net weighted balance of 35% and 37% of firms respectively expect higher output in the 2Q2021.

The electronics cluster expects higher production of semiconductors and other electronics components such as capacitors and filters, while the precision engineering cluster foresees higher output of semiconductor-related and process control equipment.

The chemicals cluster, on the other hand, saw a mere net weighted balance of 2% of firms anticipating higher output in the 2Q2021.

A weighted 77% of firms in the manufacturing sector expect employment levels for the 2Q2021 to remain similar q-o-q.

A net weighted balance of 9% of manufacturers plan to hire more workers in the 2Q2021, compared to the preceding quarter, with biomedical manufacturing, electronics and precision engineering clusters being the most optimistic in employment outlook.

A weighted 72% of firms in the sector say there are no limiting factors that would affect their ability to obtain export orders in the 2Q2021, but cited that the top two limiting factors are the Covid-19 pandemic and price competition from overseas competitors.

Another weighted 72% of firms say they plan to invest in plant and machinery in the next 12 months ended March, with a weighted 65% of firms expecting higher or similar levels of capital expenditure. The planned investments are largely for the replacement of worn-out equipment and expanding production capacity.