Business optimism plunges but firms are still hiring: Survey

Businesses in Singapore are starting the year with a cautious outlook amid mounting concerns over global headwinds and lacklustre export demand.

But the good news is that many firms are still keen to hire staff.

The results of a survey released yesterday by the Singapore Commercial Credit Bureau (SCCB) show companies are less optimistic about sales, profits and new orders for this quarter compared with the same period last year.

The bureau's latest Business Optimism Index tumbled to +1.11 percentage points this quarter, down sharply from +13.13 percentage points in the corresponding period last year.

The quarterly survey polled 200 business owners and senior executives representing major industry sectors.

They were asked if they expect increases, decreases or no changes in sales, profits, employment, new orders, inventories and selling prices.

The services and agriculture sectors were the most optimistic, with at least four business indicators flagging expansion.

Both the construction and wholesale sectors took a turn for the worse in terms of confidence levels.

The transportation sector was the least optimistic, with four out of five business indicators pointing to a contraction.

"In line with the slow pace of global economic recovery, the local business outlook continues to remain modest... It is clear that global adverse developments have roiled business confidence," said SCCB chief executive Audrey Chia.

Firms identified higher business costs as the main challenge for this year, followed by global economic uncertainties, foreign labour issues and reduced sales.

Despite these challenges, companies are still keen to take on more staff.

The survey showed that hiring sentiment remains positive in this quarter, driven mainly by domestically oriented local firms.

"The good sign is that local firms are not exactly cutting back on investments and are more likely to shift their investments towards keeping their business lean, nimble and productive," said Ms Chia.

"This may involve skills upgrading of employees or the upgrading of machinery and capital equipment."

Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said the uncertain environment means that many firms are proceeding with "a lot of caution".

Small and medium-sized enterprises hire about seven out of every 10 workers, and contribute about half of Singapore's economic output.

Despite the uncertainties, however, "investment and training are not things that companies should hold back on", said Mr Wee.

"Companies might be more cautious in taking an expansionary perspective, but strengthening and improving their current business - they should have no qualms about doing that."

This article was first published on January 13, 2015.
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