SINGAPORE - Ongoing geopolitical uncertainties in the world and faltering global economic growth have resulted in a slip in local business confidence.
The latest quarterly Business Optimism Index (BOI) study shows that business optimism has slipped to a one-year low in Q4, said Singapore Commercial Credit Bureau (SCCB) in a statement today.
Overall BOI score declined further for the second consecutive quarter from +14.65 percentage points to +10.70 percentage points.
This also marks the lowest BOI score registered in a year since Q3 in 2013, when BOI posted +10.53 percentage points.
Compared to a year ago, overall BOI score plummeted sharply from +33.98 percentage points in the same quarter last year to 10.79+ percentage points in Q4 of 2014.
The survey showed that both wholesale and construction sectors ranked atop as the most optimistic sectors. Despite the upbeat sentiments, business confidence within the construction sector continues to dampen.
SCCB attributed the muted sentiments to the cooling private residential market.
Meanwhile, the services industry took a tumble from the top to become the fourth most optimistic sector. SCCB said this is largely due to a fall in tourist arrivals in light of the recent spate of aviation disasters.
Due to a large decline in both electronics and transport engineering clusters, business outlook among manufacturers also remains weak with new orders declining into the contractionary region for the first time since Q1 2012.
As a result, the transportation industry in Singapore has become the second least optimistic sector.
The survey also showed that hiring sentiments have held relatively steady this quarter albeit a deceleration in job creation and a tight labour market. Employment levels are expected to improve slightly as optimism levels edged up, said SCCB.
SCCB's chief executive officer Audrey Chia said: "Recent market volatilities and political instability in various parts of the world have weighed on the sentiments of local firms with sizeable global and regional footprints.
"on the other hand, we have the domestically-oriented SMEs and small business owners who continue to contend with rising cost pressures and manpower issues.
"However, the situation is not all that bleak. While growth within certain sectors such as service and manufacturing have remained subdued, optimism levels within the financial and wholesale trade sectors have made marked improvements.
"This is likely attributed to the strong performance of the financial intermediation cluster and a turnaround in regional tradeflows."