SMEs expect strong sales, profits in next two quarters

Optimism seems to be on the rise for small and medium-sized enterprises (SMEs), with expectations of strong sales and profit performance in the next two quarters.

A quarterly index mapping business sentiment ticked up from 51.2 to 51.8, signalling an improved outlook for the second and third quarters.

A score over 50 indicates growth expectations; one below signals a possible contraction.

The findings showed that all industries recorded overall index scores of above 50 with business services remaining the most optimistic with an overall score of 52.1.

That was closely followed by the commerce/trading sector with 52 and transport/storage with 51.9.

The other three sectors are retail/food and beverage, construction/engineering, and manufacturing - which all showed improvements from the previous survey, conducted by the Singapore Business Federation (SBF) and DP Info.

In addition to an overall score, the index includes company turnover and profit expectations, measured on a scale of 1 to 10.

SMEs expect the next two quarters to deliver their strongest sales and profit results in three years.

All six industries expect their turnover to rise during the next six months, lifting the turnover expectations score to 5.38 - the highest score since the third quarter of 2015.

As many SMEs are focused on the domestic market, an expected increase in sales strongly suggests a growing confidence in the Singapore economy, said a joint statement by DP Info and the SBF.

With expectations of increased revenue, the profitability expectations score correspondingly also rose to 5.28, with every sector anticipating an improvement in its bottom line.

This is the best profitability expectations score since the second quarter of 2015.