Singapore SMEs slightly more optimistic: Index

The SBF-DP SME Index on Thursday showed a rise by 0.6 point to 50.4, which suggests they are expecting some growth in the next six months.
ST file photo

THE sentiment of Singapore small-and-medium enterprises (SMEs) has improved slightly despite the continuing dour outlook for sales and profits.

The SBF-DP SME Index on Thursday showed a rise by 0.6 point to 50.4, which suggests they are expecting some growth in the next six months.

The improvement in sentiment follows last quarter's score of 49.8, which was the first time the index had ever fallen below 50. A score below 50 indicates a state of pessimism.

More than 3,600 SMEs were surveyed in January and February 2017 on their outlook and sentiment. The survey is jointly published by the Singapore Business Federation (SBF) and DP Information Group (DP Info).

All seven industry sectors have improved their outlook, though the index suggests that some of the gains are marginal.

Photo: SBF, DP Info

Ho Meng Kit, CEO of SBF, said: "SMEs' sentiment has rebounded slightly from a historic low . . . this is positive news aligned with the better outlook of the global economy and a more upbeat assessment of the Singapore economy for 2017.

"However, it is too early to say that the worse is behind us for the SME sector. Whilst there are some indications that SMEs are adapting to the changing economic climate and technological advances, we have not detected a firm trend of improvement."

The turnover outlook expectations score rose by 0.1 point to 4.93, which while indicating the outlook has improved, still means companies are expecting lower sales. Only the retail, F&B, and business services sectors, expect any turnover growth between now and September.

SMEs also expect their profits to fall, despite a slight improvement in their outlook. The overall profitability expectations score increased from 4.71 to 4.82, which indicates many SMEs have reduced profit margins.

What is worth watching is the changes in capital investment as a means to boost productivity.

The overall capital investment expectations score rose by 0.96 per cent to 5.27. The scoring in funding access has also improved after a two-quarter decline. The improvement in confidence to access financing was observed across all sectors, led by construction and engineering.

Mr Ho noted that in the retail and F&B sector, the business expansion expectations index dipped 0.16 point from 5.79 to 5.63, reflecting structural issues faced in this sector.

"Yet, companies in this sector have raised their capital investment expectations. This could indicate companies are investing in automation and innovation to create efficiency and grow new revenue streams amid changing consumer habits and developments in e-commerce. This will be a welcome development if the trend holds."

This article was first published on March 31, 2017.
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