Business sentiment improves SMEs rises for first time in 7 quarters

June 20, 20169:25 am294 views
Business sentiment improves SMEs rises for first time in 7 quarters
SMEs at Toa Payoh Lorong 8's industrial park. (File photo: Calvin Oh)

SINGAPORE: Business sentiment among small- and medium-size enterprises (SMEs) has risen for the first time in seven consecutive quarters, according to an index released on Thursday (Jun 16).

According to the SBF-DP SME Index – a six-month forward-looking index which measures the sentiments of SMEs – the level of business confidence rose by 1.9 points to 51.9 points, after hitting an all-time low of 50 in the last quarter.

More than 3,600 SMEs were surveyed in April and May on their outlook and sentiment.

According to the Singapore Business Federation (SBF), the score indicates that SMEs are “marginally optimistic” about their growth prospects, and expect improvements in their turnover and profits in the second half of 2016.

The business services sector was the most optimistic group of SMEs, while the transport/storage sector had the biggest improvement in sentiment, according to SBF.

Anticipating a boost in sales, more SMEs also plan to hire more workers over the next six months, with the hiring expectations score rising from 5.23 to 5.47, said SBF.

“On a historical basis, there tends to be an improvement in SME sentiment for the third quarter and fourth quarter. This is likely to be due to seasonal effects of higher consumption expectations for the year-end during the festive season,” SBF CEO Ho Meng Kit said.

“That said, the increase in the index this time around is also likely to be supported by the stabilising commodity and oil prices, lower volatility in the export markets and positive expectations from the recently announced measures in the Singapore Budget,” he added.

However, Mr Ho said that SBF remains “cautiously optimistic” in their outlook. “On a year-on-year basis, the SME Index for the third quarter to fourth quarter is the lowest since we started the index in 2009… To remain competitive, businesses should leverage the measures initiated by the Singapore Government to assist SMEs through financing, training and technological transformation programmes.”

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