Hiring and new orders slow as Singapore firms take a more cautious view

SINGAPORE: Business sentiment among Singapore companies has weakened for the third consecutive quarter, according to the latest Business Optimism Index (BOI) released by the Singapore Commercial Credit Bureau (SCCB).

The report showed that the BOI for the third quarter eased to 4.0 percentage points, down slightly from 4.1 percentage points in the second quarter. Compared with the same period a year ago, the index also declined from 4.3 percentage points to 4.0 percentage points.

The latest reading suggests that while businesses remain generally optimistic about the months ahead, confidence has continued to soften amid a more uncertain operating environment.

On a quarter-on-quarter basis, three of the six key indicators tracked by the survey recorded improvements. These were sales volume, net profit and selling price, indicating that companies still expect revenue and earnings growth in the coming quarter.

However, sentiment weakened in the remaining three indicators: new orders, inventory levels and employment. The slower pace of growth in these areas points to greater caution among firms as they plan for the months ahead.

Sector-level results showed significant differences in outlook across industries. The financial sector emerged as the most upbeat, with five of its six indicators remaining in positive territory. The wholesale trade, services and transportation sectors also maintained relatively positive outlooks, each recording four positive indicators.

Analysts note that the continued decline in business optimism reflects a more cautious stance among companies regarding future prospects.

While expectations for sales and profits remain positive, the slowdown in new orders and hiring activity, together with a more conservative outlook across most sectors, suggests that businesses are preparing for tougher conditions ahead.

An industry insider told the press that companies are likely to remain prudent in the coming months, balancing efforts to capture growth opportunities with the need to keep costs under control.

Businesses are also expected to remain flexible in adjusting their strategies as market conditions evolve, in line with Singapore’s outlook for moderate economic growth.