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Services sector cautiously optimistic about prospects for second half of year: Survey

All sectors in the industry, except for F&B, expect to increase hiring in the July-September 2014 period, according to a Department of Statistics study.

SINGAPORE: Firms in the services sector are increasingly optimistic about business conditions. According to the Department of Statistics (DOS), a net weighted balance of 13 per cent of firms are optimistic about business prospects for the six months ending in December 2014.

This, compared with a net weighted balance of 5 per cent in the previous survey three months ago, and 1 per cent in the survey before that. A majority of firms in the DOS study - 71 per cent - expected things to remain the same from July to December 2014.

According to the Business Expectations Survey of about 1,500 enterprises in the services sector conducted quarterly by the DOS, 21 per cent of firms in the services sector are optimistic about business prospects, while 8 per cent predict their businesses will deteriorate.

The outlook in the accommodation industry was more positive, with 37 per cent of firms expecting better business prospects from July to December this year. Hotels are expecting a boost in business with the upcoming Formula One night race, the DOS said.

Similarly, firms in the financial and insurance industry are optimistic, with 25 per cent foreseeing the business climate to improve in the coming six months. In particular, banks cited the gradual global economic recovery as the reason for their positive outlook.

The exceptions were food and beverage services and real estate, which registered negative net weighted balances of -5 per cent and -23 per cent, respectively. Restaurants cited the shortage of labour as the key factor adversely affecting their business outlook. The series of government measures implemented, including the Additional Buyer’s Stamp Duty and Total Debt Servicing Ratio continue to be the reasons cited by real estate developers for their negative outlook.

REVENUE AND EMPLOYMENT

About 13 per cent of firms in the services sector expect revenue to increase for the third quarter of 2014, with the accommodation industry being the most optimistic in its operating receipts forecast.

In the transport and storage services industry, 27 per cent of firms are looking forward to higher revenues. In particular, shipping lines foresee increased volume, compared to April to June 2014.

The recreational, community and personal services industry and healthcare providers are also optimistic in their outlook as they anticipate increased demand for their services. On the other hand, 31 per cent of firms in the real estate industry predict operating receipts to fall, with developers expecting both sales volume and prices to drop during this period.

In terms of employment, all industries within the services sector, except the food and beverage services industry, expect to increase hiring for the third quarter of 2014. A net weighted balance of 42 per cent of firms in the financial and insurance industry, in particular banks, expect to increase hiring in anticipation of the global economic recovery. The food & beverage services industry, however, expects to hire fewer staff due to shortage of manpower. 

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