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Business optimism crashes to all-time low as economic jitters escalate

Firms are extremely pessimistic about their prospects.

Local business optimism dipped into negative territory for the first time in three years, according to Singapore Commercial Credit Bureau (SCCB)’s Business Optimism Index (BOI) for the fourth quarter.

The study revealed that BOI hit a historical low as it tumbled into negative territory from 0.14 percentage points in 4Q15 to -2.93pp in 1Q16. On YoY terms, BOI slid from 1.11pp in 1Q15 to -2.93pp 1Q16.

The pessimism is rooted mainly in flagging consumer demand globally on top of continued weakness and flat growth recorded in sectors such as wholesale and manufacturing for most of 2015.

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“While domestically-oriented industries will continue to be important pillars of growth, we are already seeing some signs of easing within certain sectors such as construction. Our findings revealed that the outlook for construction firms has dampened for Q1 2016,” stated Audrey Chia, SCCB’s CEO.

“Firms have lowered their expectations in terms of business expansion plans moving into 2016. Given that global risks are likely to be skewed to the downside, we anticipate optimism levels to remain muted in the months ahead,” added Chia.

Every quarter, the study surveys 200 business owners and executives representing major industry sectors across Singapore if they expect increases, decreases or no changes in their upcoming quarterly sales, profits, employment, new orders, inventories and selling prices. These six function as the study’s key indicators.



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