On Tuesday (10 March), the Singapore Commercial Credit Bureau’s (SCCB) released its most recent Business Optimism Index (BOI) study.
Due to the health risks and potential economic impact from the Covid-19 outbreak, the study revealed that business sentiments among Singapore companies have plummeted to an all-time low in Q2 of 2020.
In Q2 this year, business sentiments sank to -7.88 percentage points from 5.31 percentage points in Q1 2020, with all of the six indicators studied showing negative figures.
Based on year-on-year comparison, the BOI sharply declined, dropping 12.96 percentage points from +5.08 percentage point in Q1 of 2019.
SCCB began polling companies for the study in Q3 of 2010, and the latest Q2 2020 records the lowest figure since then, SCCB spoke to The Business Times.
According to Audrey Chia, SCCB’s chief executive officer, the optimism levels plunged because of the negative spillover effects from the disruption of supply chains, slowing Chinese demand, and the increased global health risks brought by Covid-19.
Of the six indicators, the indicators that dropped the most were new orders, selling price, and volume of sales. Q2 2020 saw selling price declining 17.42 percentage points to -8.46 percentage points from +8.96 percentage points in Q1 2020.
New orders dropped 16.42 percentage points to -12.44 percentage points from +3.98 percentage points, whereas volume of sales declined 16.92 percentage points to -9.95 percentage points from +6.97 percentage points.
The study surveyed 200 senior executives and business owners in major industry sectors across the country while the figures were obtained by deducting the percentage of respondents expecting decreases from the percentage expecting increases percentage, SCCB stated.
Looking at sectors, only finance and transport sectors showed some positive indicators. The only positive indicator for the transport sector is inventory levels, which spiked to +42.86 percentage points from -14.29 percentage points. As for the finance sector, net profits were the only positive indicator, which declined to +16.67 percentage points from +100 percentage points.
On the other hand, inventory levels fell to -30 percentage points from +10 percentage points, whereas selling price slid to -30 percentage points from +30 percentage points in the construction sector.
In the services sector, volumes of sales sentiment plunged to -51.61 percentage points from +54.84 percentage points, whereas net profits sank to -19.36 percentage points from +54.84 percentage points in Q1 2020.
In addition, the biggest decline in new orders and selling price occurred in the manufacturing sector as both indicators dropped to -10 percentage points from +15 percentage points.
“The recent Budget 2020 measures, such as the Stabilisation and Support Package to help businesses tide through the Covid-19 outbreak, will to some extent provide some short-term relief to firms in managing their cash flow and manpower,” noted Ms Chia.
She also warned that potential disruptions and downside risks are real due to the spate of uncertainties in the development and trajectory of the virus outbreak.
“Firms will have to brace for tougher times and continued uncertainties ahead,” Ms Chia concluded.
