SERVICES and manufacturing companies remain gloomy about their prospects, as the coronavirus pandemic forces Singapore into an unprecedented recession.
That was even as sentiment picked up slightly from three months ago, when non-essential businesses were shuttered during a two-month "circuit breaker" or semi-lockdown.
Besides the Covid-19 pandemic, tensions between the United States and China are another cause for concern, especially for manufacturers, according to quarterly surveys released by the Economic Development Board (EDB) and Department of Statistics (SingStat) on Thursday.
The six-month outlook for the services sector has recovered slightly from the record low in the last poll. A net-weighted balance of 31 per cent of services firms believe that business will decline from July to December, compared with 58 per cent that thought so in March and April.
The decline was felt across the board, ranging from a net-weighted balance of -17 per cent in the information and communications industry, to -76 per cent in accommodation services.
The outlook for food and beverage (F&B) operators and retailers also remains grim, with a net-weighted balance of -32 per cent in F&B services and -24 per cent in retail trade.
Still, SingStat noted that this is an improvement from the net-weighted balance of -96 per cent for F&B and -84 per cent for retailers in the last survey, which covered the "circuit-breaker" period.
Such traders have been allowed to reopen their stores since June 19, but are subject to safe-management measures and capacity restrictions that could take a toll on business.
Among manufacturers, a net-weighted balance of 7 per cent expect business conditions to be worse in the second half of the year than in the April-to-June period.
That was an improvement from the net-weighted balance of 56 per cent reporting pessimism in the previous survey, but the EDB still characterised sentiment as "subdued".
Indeed, the cheer in manufacturing was far from evenly felt. The sector's rosier outlook was driven by areas such as the semiconductor segment in the electronics cluster, which the EDB said foresees "resilient" demand from the 5G market, as well as cloud storage and data centres.
On the other hand, a negative mood prevailed in infocomms and consumer electronics and other electronic modules and components, as orders are expected to take a hit.
Meanwhile, the pessimism in biomedical manufacturing came on the back of potential supply-chain delays in pharmaceuticals, while the transport engineering cluster was deeply concerned about the impact of low oil prices and grounded aircraft fleets.
The net-weighted balance is the difference between the share of companies that expect business conditions to improve, and those that expect them to deteriorate.
In the shorter term, most services and manufacturing clusters expect lower business activity or factory output in the next three months, despite the reopening of domestic and export markets.
A net-weighted balance of 29 per cent of services firms expect a drop in operating receipts from July to September.
The mood was dragged down by travel agencies and event organisers, as well as businesses that offer accommodation services and amusement and recreation services - all of which have been badly hit by the suspension of international tourism.
Real estate is also struggling more than other services sectors, on fears of "downward pressure on rental rates due to weaker demand for commercial and office spaces", SingStat said.
Meanwhile, a net-weighted balance of 6 per cent in manufacturing tipped an output decline, with the EDB calling companies "generally cautious about their production plans" amid uncertainties.
Even though precision engineering firms are looking to fulfil order backlogs and meet growing demand for goods such as optical products, chemicals manufacturers anticipate weak regional demand for mineral oil additives and flavours and fragrances, the EDB said.
The biomedical manufacturing cluster was the dourest - a net-weighted balance of 37 per cent of respondents expect production levels to decrease in the quarter ahead, as output of active pharmaceutical ingredients and biological products declines from an earlier high.
The employment front was also gloomy, with a net-weighted balance of 21 per cent in services and 7 per cent in manufacturing forecasting a shrinking workforce from July to September.
Still, employer sentiment improved in June on the conclusion of the "circuit breaker", the Ministry of Manpower had earlier reported in flash data on Wednesday.
Some 20.6 per cent of companies said they plan to lower salaries in the next two months, down from 25.8 per cent in May, while 16.7 per cent plan to cut staff, against 20.7 per cent in May.