SINGAPORE - Firms in Singapore's manufacturing and services industries remain pessimistic about the business outlook for the second half of the year, amid the ongoing coronavirus pandemic and uncertain global trade and macroeconomic conditions.

Their sentiments were captured in separate surveys released by the Economic Development Board (EDB) and the Department of Statistics (SingStat) on Thursday (July 30).

Overall, the services sector expects business conditions to worsen in the six-month period from July to December. Forty per cent of firms foresee slower business conditions while 9 per cent are optimistic, resulting in a net weighted balance of 31 per cent of firms predicting business will get worse.

However, despite the overall negative outlook, they are slightly more optimistic about the July to December period as compared to the six months from April to September.

In comparison, manufacturing firms are generally more optimistic than those in the services sector, with a net weighted balance of 7 per cent of firms predicting softer business prospects. Among factors for their subdued outlook are United States-China trade tensions.

Services firms are expecting employment levels to drop for the third quarter, compared with the second quarter. Those in the accommodation industry expect to reduce hiring in the July to September period, in line with their outlook for operating receipts. Business services firms such as travel agencies and event organisers foresee lower employment levels as well as they expect slower business.

Across all segments, business activity level is expected to decline for the July to December period compared to January to June.

The accommodation and real estate industries are most pessimistic, with the accommodation segment expecting a fall in demand due to low tourist arrivals amid travel restrictions.

Firms engaged in the rental of commercial and office premises foresee downward pressure on rental rates due to weaker demand for commercial and office spaces.

Operating receipts are expected to decrease for the three-month period ending in September, compared with the previous three months.

Among manufacturers, a net weighted balance of 7 per cent of firms are predicting a less favourable business situation between July and December, compared with the second quarter of the year.

A large proportion of manufacturing firms - a weighted 83 per cent - expect employment levels in the third quarter of the year to remain similar to the second quarter.

Overall, a net weighted balance of 7 per cent of firms plan to hire fewer workers in the next three months, with all clusters apart from the biomedical manufacturing cluster projecting a smaller workforce for the July to September period.

Across sectors, the transport engineering cluster is the most pessimistic about the business environment, with a net weighted balance of 43 per cent of firms expecting the operating environment to remain weak in the second half of the year.

The electronics cluster was the most optimistic, with a net weighted balance of 1 per cent of firms anticipating an improved business outlook in the July to December period. Within the cluster, the semiconductors segment foresees resilient demand from the 5G market, cloud storage and data centres.

However, the info-communications and consumer electronics, as well as other electronic modules and components segment, expect orders to be negatively affected by Covid-19 and United States-China tensions.

A net weighted balance of 22 per cent of the biomedical manufacturing cluster predict a weak business situation in the six months ending December 2020, with the softer outlook mainly in the pharmaceuticals segment where there are some concerns over potential delays in the supply chain.

But the medical technology segment is more optimistic about the operating environment ahead, given that its export markets are gradually re-opening following the global lock-downs in the April to June period.

A net weighted balance of 6 per cent of manufacturers also expect output to decrease in the third quarter of the year, compared with the second quarter, with firms cautious about their production plans.

A majority of manufacturing firms reported no limiting factors that would affect their ability to get export orders in the July to September period.