Singapore's business confidence drops sharply in Q1

The Business Optimism Index (BOI) in Singapore is projected to drop to a low level in the first quarter of 2015 amid global political headwinds and softer regional demand in external-oriented sectors, the Singapore Commercial Credit Bureau (SCCB) said on Monday.

BOI declined dramatically from +10.79 percentage points in the fourth quarter of 2014 to +1.11 in the latest first quarter this year, the second lowest since the first quarter of 2013, when BOI fell to -0.82 percentage point, the report showed.

On a year-on-year basis, BOI fell sharply from +13.13 percentage points in the first quarter of last year to +1.11 in 2015.

Among the six indicators which measure BOI, only three remained in the expansionary region, while in the previous quarter, five of them were in that region.

Volume of Sales, Net Profit and New Orders fell in the contractionary region in the first quarter, with volume of sales fell to -5.71 percentage points from +22.14, and net profit plummeted to -5.00 percentage points from +17.14, respectively.

New orders, which was the only one in the contractionary region in the previous quarter, improved slightly from -13.04 percentage points to -9.52 in the first quarter, due to a better performance of biomedical manufacturers.

In the meantime, Hiring sentiments, Selling Price and Inventory remained in the expansionary region.

"In line with the slow pace of global economic recovery, local business outlook continues to remain modest following the previous quarter's decline in BOI. It is clear that global adverse developments have roiled business confidence as BOI slid further, hovering just above contractionary levels this quarter," said SCCB CEO Audrey Chia.

Looking ahead, Chia said local firms were expected to upgrade their employees or machineries and capital equipment to keep their business productive.

The SCCB conducts the Business Expectations Surveys every quarter, with 200 businessmen in major industry sectors telling their expectation toward profits, sales, employment, new orders, inventories and selling prices.