Over 1 in 5 manufacturers bearish about business in H2

Low demand for semiconductors, slow global economy and trade tensions hit the sector.

A weighted 22% of almost 400 manufacturers expect a softer business situation whilst 11% anticipate a less favorable business situation for the second half of the year amidst global trade tensions, according to the Economic Development Board (EDB). About 14% of manufacturers also expect output to decrease in the third quarter of 2019.

In contrast, a weighted 11% of manufacturers predicted that business conditions will improve in H2 with 77% reported no limiting factors that would affect their ability to obtain export orders in Q3. However, 21% of firms cited price competition from overseas competitors as well as political or economic conditions abroad as the top limiting factors that could affect their export orders.

Biomedical manufacturers are the most optimistic, with 17% of firms anticipating improved business conditions in H1, whilst 6% of firms are projecting higher level of production in Q3. This outlook is largely driven by the pharmaceuticals segment and expectation of a higher export demand, which in turn will lead to increased production of biological products.

On the other hand, EDB said that the chemicals, electronics and precision engineering clusters were less optimistic about their business situation and expects lower output amidst concerns on the declining refining margins and weaker demand from the region, particularly from China. In particular, the electronics and precision engineering cluster faces subdued demand for semiconductors and semiconductor-related equipment, as well as uncertainties arising from the trade conflict.

Firms in the petroleum segment also anticipate lower refining throughput in view of scheduled plant maintenance.

Meanwhile, 85% forecast the employment level in Q3 to remain similar to the preceding quarter. Overall, a net weighted balance of 1% of manufacturers plan to hire fewer workers in Q3 compared to Q2. However, firms in the general manufacturing industries and precision engineering clusters project a smaller workforce in the next three months.

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