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Business sentiment drops further in 2Q2023, making this the fifth straight quarter of moderations

Felicia Tan
Felicia Tan • 2 min read
Business sentiment drops further in 2Q2023, making this the fifth straight quarter of moderations
The SCCB expects the outlook to be “uncertain” with several macroeconomic factors likely to weigh on business confidence in the coming months," says SCCB's CEO Audrey Chia. Photo: Bloomberg
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Business sentiment in Singapore has fallen further in the 2Q2023, making this the fifth straight quarter of moderations.

“The outlook for local businesses has deteriorated slightly owing to a slowdown in manufacturing and wholesale trade sectors. There are also visible moderations in sentiment across the services and financial sectors for 2Q2023,” says Audrey Chia, Singapore Commercial Credit Bureau’s (SCCB) CEO.

According to the SCCB, the business optimism index (BOI) fell to 4.60 percentage points in 2Q2023, down from 5.35 percentage points in the year before and down from 4.73 percentage points in the previous quarter.

The BOI measures business confidence in the economy and is based on a survey that is designed to capture business expectations.

The figures represent the difference between the percentage of respondents expecting increases and declines across six indicators: sales volume, net profits, new orders, employment levels, inventory levels and selling price.

However, during the quarter, all six indicators were expansionary, compared to five indicators in the 1Q2023. That said, two of six indicators saw y-o-y improvements while only one indicator saw improvements on a q-o-q basis.

See also: Singapore keeps 2024 GDP growth forecast at 1% to 3%; expects gradual manufacturing and trade recovery

On a y-o-y basis, volume of sales fell to 1.49 percentage points in the 2Q2023, down from the 2.99 percentage points in the 2Q2022.

Net profit among businesses fell to 0 percentage points during the current quarter, down from 2.99 percentage points in the corresponding period the year before.

Meanwhile, selling prices rose to 14.18 percentage points in the 2Q2023, up from 5.22 percentage points in the 2Q2022, while new orders increased to 8.96 percentage points in the 2Q2023, up from 2Q2022’s 5.22 percentage points.

See also: Another possible delisting hastens calls for SGX revival

Inventory levels, however, fell to -4.48 percentage points in the 2Q2023, deepening from the -1.48 percentage points in the 2Q2022.

Employment levels also fell to 7.46 percentage points in the 2Q2023 from 11.94 percentage points in the 2Q2022.

On a sector-based outlook, the construction, financial, services and transportation sectors were the most optimistic while the outlook for the manufacturing and wholesale sectors deteriorated.

Further to her statement, Chia adds that the SCCB expects the outlook to be “uncertain” amid several factors such as the rising interest rates, latent vulnerabilities of the global financial system and escalations in geo-political tensions.

“[These] are likely to weigh on overall business confidence in the coming months,” she says.

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