S'pore manufacturing, services firms more hopeful for months ahead with boost from AI, travel: Surveys

Source: The Straits Times
Author: Prisca Ang

SINGAPORE - More local manufacturers and services firms are optimistic about business conditions in the months ahead due to factors such as a boom in artificial intelligence-related products and the return of travel, separate surveys showed on April 30.

A net weighted balance of 22 per cent of manufacturing firms anticipate a favourable business situation for the April to September period, compared with the first quarter of 2024, according to a poll by the Economic Development Board (EDB).

This is much higher than the 10 per cent figure in its previous quarterly survey.

Meanwhile, a Singapore Department of Statistics (SingStat) survey showed that for the services sector, a net weighted balance of 7 per cent of companies expect a more favourable business outlook, up from 5 per cent in the previous survey.

The net weighted balance is the difference between the weighted shares of positive and negative responses, with a positive figure indicating more optimism than pessimism.

In the manufacturing sector, all clusters expect their business situation to improve, with electronics emerging as the most optimistic.

The cluster had a net weighted balance of 40 per cent of firms projecting positive business prospects in the six months to September, compared with the first quarter.

Firms in the semiconductor and other electronic modules and components segments are especially bullish, amid improved demand in consumer electronic devices. Strong artificial intelligence (AI) server demand is also expected to boost orders for memory, storage and networking chips.

The transport engineering cluster's marine and offshore engineering segment anticipates an increase in projects from the global oil and gas and offshore renewables markets.

The aerospace segment also expects robust demand for aircraft maintenance, repair and overhaul jobs as global and regional air travel returns to pre-pandemic levels.

Meanwhile, the precision engineering cluster had a net weighted balance of 10 per cent of firms setting their sights on better business prospects, even as orders for the machinery and systems segment might experience some near-term weakness.

The cluster's precision modules and components segment expects that orders will improve, with the upturn in the global semiconductor industry.

In general manufacturing, the food, beverages and tobacco segment is likely to see higher export demand for animal feeds and beverage concentrates. On the other hand, firms in both the printing and miscellaneous industries segments are concerned about higher operating costs, with the printing industry also expecting fewer jobs due to digitalisation.

When it comes to output, a net weighted balance of 2 per cent of manufacturers expect higher output in the second quarter, compared with the first.