PESSIMISM is increasingly taking hold of local companies with most now resigned that things will get worse over the next few months.
The weak sentiment is affecting industries across the economic spectrum, from hotels to petroleum and manufacturing. 'Firms are becoming more realistic in their outlook,' said HSBC economist Prakriti Sofat. 'There is no escaping the fact that things are deteriorating much faster than expected.'
All clusters within the manufacturing sector are downbeat, according to a survey conducted among about 390 firms by the Economic Development Board in recent weeks.
And about 60 per cent of the 1,400 services companies surveyed by the Department of Statistics also anticipate slower business in the wake of the global economic decline.
The most downbeat industries in manufacturing are computer peripherals and petroleum while hotels in the services sector are mired in gloom with 100 per cent of those surveyed believing that there is no way but down.
All other sectors have at least a few firms which believe that things will improve by June.
A comparison with the same survey last October provides a stark illustration of just how quickly sentiment has deteriorated.
Last October, four in 10 hotels, restaurants and caterers were still optimistic. They predicted a brighter outlook for March this year, with more than 90 per cent expecting to keep the same number of jobs or hire more people by the year-end.
Now not a single hotel surveyed in the recent poll retains such optimism.
Manufacturing is almost as grim. Last October, only 18 per cent of firms were pessimistic but now that has rocketed, with 57 per cent of manufacturers expecting conditions to worsen in the next six months.
All manufacturing industries apart from biomedical manufacturing are predicting job cuts in the next few months. They believe output will fall across the board, ranging from a 14 per cent decrease in food, beverages and tobacco production to a 100 per cent drop in some electronic modules and components.
One of the few bright spots is pharmaceutical firms, with 26 per cent believing that things will look up, although more than half still think it will get worse.
Job cuts are the most visible manifestation of the mood.
Chipmaker Chartered Semiconductor Manufacturing announced yesterday that it plans to cut more than 500 jobs here after forecasting a net loss of about US$147 million (S$221 million) for the first quarter.
The manufacturing sector lost 6,200 jobs in the last three months of last year, said the Manpower Ministry yesterday.
Employment is also likely to fall for services firms, according to the survey. In almost every industry, from wholesale and retail trade to financial and business services, there are more firms predicting job cuts than those anticipating more hires. Overall, 53 per cent of services firms expect things to get worse, with banks and fund managers among the gloomiest.
The Government expects the economy to shrink by up to 5 per cent this year after growing 1.2 per cent last year. Last week, Finance Minister Tharman Shanmugaratnam unveiled a $20.5 billion 'resilience' Budget to help firms improve cashflow and preserve jobs.
Ms Sofat said: 'We are seeing things being done to cushion the blow somewhat, but it remains to be seen how much of that will actually go through. There will be more layoffs over the year, there is no escaping that fact.'
This article was first published in The Straits Times on January 31, 2009.
The weak sentiment is affecting industries across the economic spectrum, from hotels to petroleum and manufacturing. 'Firms are becoming more realistic in their outlook,' said HSBC economist Prakriti Sofat. 'There is no escaping the fact that things are deteriorating much faster than expected.'
All clusters within the manufacturing sector are downbeat, according to a survey conducted among about 390 firms by the Economic Development Board in recent weeks.
And about 60 per cent of the 1,400 services companies surveyed by the Department of Statistics also anticipate slower business in the wake of the global economic decline.
The most downbeat industries in manufacturing are computer peripherals and petroleum while hotels in the services sector are mired in gloom with 100 per cent of those surveyed believing that there is no way but down.
All other sectors have at least a few firms which believe that things will improve by June.
A comparison with the same survey last October provides a stark illustration of just how quickly sentiment has deteriorated.
Last October, four in 10 hotels, restaurants and caterers were still optimistic. They predicted a brighter outlook for March this year, with more than 90 per cent expecting to keep the same number of jobs or hire more people by the year-end.
Now not a single hotel surveyed in the recent poll retains such optimism.
Manufacturing is almost as grim. Last October, only 18 per cent of firms were pessimistic but now that has rocketed, with 57 per cent of manufacturers expecting conditions to worsen in the next six months.
All manufacturing industries apart from biomedical manufacturing are predicting job cuts in the next few months. They believe output will fall across the board, ranging from a 14 per cent decrease in food, beverages and tobacco production to a 100 per cent drop in some electronic modules and components.
One of the few bright spots is pharmaceutical firms, with 26 per cent believing that things will look up, although more than half still think it will get worse.
Job cuts are the most visible manifestation of the mood.
Chipmaker Chartered Semiconductor Manufacturing announced yesterday that it plans to cut more than 500 jobs here after forecasting a net loss of about US$147 million (S$221 million) for the first quarter.
The manufacturing sector lost 6,200 jobs in the last three months of last year, said the Manpower Ministry yesterday.
Employment is also likely to fall for services firms, according to the survey. In almost every industry, from wholesale and retail trade to financial and business services, there are more firms predicting job cuts than those anticipating more hires. Overall, 53 per cent of services firms expect things to get worse, with banks and fund managers among the gloomiest.
The Government expects the economy to shrink by up to 5 per cent this year after growing 1.2 per cent last year. Last week, Finance Minister Tharman Shanmugaratnam unveiled a $20.5 billion 'resilience' Budget to help firms improve cashflow and preserve jobs.
Ms Sofat said: 'We are seeing things being done to cushion the blow somewhat, but it remains to be seen how much of that will actually go through. There will be more layoffs over the year, there is no escaping that fact.'
This article was first published in The Straits Times on January 31, 2009.
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