Singapore businesses less optimistic for Q1 2019

Companies are less confident stepping into the Quarter 1 of 2019, according to a recent Business Optimism Index released by Singapore Commercial Credit Bureau.

From +9.19 percentage points in Q4 2018, the confidence levels fell to +7.19 percentage points for Q1 2019. When compared to last year, the levels were up from +4.29 percentage points in Q1 2018.

Based on a survey of 200 business owners and senior executives, the index reflects their expected improvements in the upcoming quarter when compared to the previous year. The index is based on various indicators such as employment levels, sales volume, net profits, selling price, new orders, and inventory levels. However, the employment levels have slipped on a year-on-year level. As opposed to the last quarter of this year, two of the major indicators--sales volume and net profits--ended up being lower than Q1 2019.

Machinery and capital equipment is projected to be the major area of investment going forward in 2019, with 40 percent of the respondents citing it to be a primary area of business expansion. The second sector which is likely to see the most investment is the Information Technology sector with 36 percent of the respondents saying that they would be investing in IT and technology in Q1 2019.

Upskilling employees, investing in new product development, investing in intellectual property and fueling research and development are other focus areas for most of the senior executives and business owners who were surveyed for this particular index.

While the proportion of business who expected an increase in investments rose by 9 percent in 2018 to 14 percent in 2019. However, the companies who expect their investments to reduce also rose--from 4 percent in 2018 to 7 percent in 2019. It is interesting to note that the majority of local firms anticipated their investments to remain the same at 79 percent.

When asked about key challenges that business owners expected upon entering 2019, about 26 percent said business costs and increased competition (22 percent) were the major hurdles that they foresee.

For most of the respondents, “global economic uncertainties” given the trade wars burgeoning between the Asian and Western world, is a cause of concern and a less optimistic outlook towards the next quarter.