Singapore’s service sector expects business will continue to deteriorate for the remainder of the year, according to latest reports from Singapore’s Economic Development Board (EDB) and Department of Statistics (DOS).
According to the recent survey, a net weighted balance of 31% of firms predicted worsening business from July to December this year – a slight improvement from last quarter when 58% of firms indicated a pessimistic business outlook for April to September this year. The figures, which canvassed 1,500 firms across multiple industries, reflect the substantial impact of COVID-19, with the plunge in global trade and business operations resulting in economic recession earlier this year.
Despite the city entering Phase 2 of reopening, all industries across the business services sector are expected to decline until the end of the year. Amongst them, the accommodation and real-estate industries have been the hardest hit, with a respective weighted balance of 76% and 59% of firms expecting downward trends. This is largely in part due to the COVID-19 pandemic causing global travel restrictions and low tourist arrivals, resulting in slowed activity in both industries.
Nevertheless, a marked rise in optimism has been seen across the board compared to the previous financial quarter in all industries. In particular, the food and beverage sector saw a substantial upward shift, with only 32% of firms predicting unfavourable conditions, up from 96% last quarter. Similarly, the negative business outlook for the retail sector has lessened, with only 24% of firms predicting a decline in business, compared with 84% last quarter. As lockdown measures continue to ease, establishments are now able to resume dine-in services and consumer demand in retail is expected to increase. However, strict social-distancing measures remain in place, limiting full-operating capacities.
However, as macroeconomic conditions remain uncertain, unemployment rates are expected to continue to rise in the third financial quarter, with a net weighted balance of 21% of service firms expected to reduce hiring levels. This is paired hand-in-hand with 29% of service firms expecting falls in operating receipts.