Worst is over for Singapore’s economy

Republic well-poised to pick up strongly again, says PM Lee

THE worst is over for the Singapore economy and the labour market has stabilised, Prime Minister Lee Hsien Loong said as he sounded a note of cautious optimism last night.

Although the third quarter should be all right, the outlook beyond it is still unclear, he said, adding: ‘No signs of Christmas orders pouring in yet.’

However, Singapore is well-poised to pick up strongly again because of its comprehensive and decisive response to the downturn, Mr Lee said.

Although the economy contracted 6.5 per cent in the first half of the year, it was not as bad as feared, he noted.

‘The eye of the storm has passed,’ he said.

Latest figures show that the economy grew 20.7 per cent in the second quarter over the first quarter, the first positive quarter after four quarters of contraction in a row.

Recalling the crisis, Mr Lee said the first hint was spotted when he was preparing the National Day message two years ago, when it was ‘just one little black cloud on the horizon’.

At last year’s rally, he warned of the risks of an impending storm.

However, when it arrived, it was far worse than anyone had expected, he noted.

Swiftly, the Government took action, and Mr Lee noted, when giving his overall assessment of the state of the economy, that the $20.5 billion Resilience Package to tackle the recession had worked.

There was no need for a ‘new prescription now’, he said, adding that before year’s end, the Government will review the situation and decide what needs to be done next year.

In the Resilience Package were subsidy schemes that helped save jobs and cut costs.

The subsidies for employers’ wage bills as well as workers’ training helped many to keep the same pool of workers even though their output had fallen.

However, should the recovery be delayed, companies would be forced to downsize eventually, said Mr Lee.

He foresees a subdued global recovery: ‘It will pick up, but it will not pick up in a hurry.’

Still, Singapore can grow by sharpening its skills and expanding its market share, even if world markets are not enlarging quickly, he said.

Economists interviewed after the rally said the state of the Christmas orders will be clearer by the end of next month.

Said Mr Song Seng Wun of stockbroking company CIMB-GK: ‘We will get a clearer picture whether businesses will need to hire more for the festive period.’

Christmas orders are important for local manufacturers as the festive period is when consumers in countries such as the United States spend heavily.

The economists also acknowledged that, at present, there was no need for a second stimulus package.

Existing measures have started to kick in, and recent data indicate that the global recession is easing.

OCBC Bank’s Selena Ling said: ‘Singapore had a very good second quarter, but as always, growth still hinges on how fast external demand recovers in countries like the US.’

Source: Straits Times, 17 Aug 2009

Making sense of the recent market rally

One important reason for the bullishness is that the market has already discounted much of the bad news

RECENTLY, one of my clients told me he was confused about the significance of the recent market rally. Many of the blue chips such as Singapore Airlines, NOL, SGX and CapitaLand are still making quarterly losses. On top of that, some 47 companies listed on the Singapore Exchange have announced quarterly results with combined earnings lower than the previous quarter.

On the job front, unemployment is still rising. According to the manpower ministry, the worst is not over yet. This is the first time employment has contracted for two consecutive quarters since the 2003 economic downturn.

GDP for 2009 is expected to contract by 4 per cent to 6 per cent. ‘Aren’t all these bad news for the stock market?’ he asked. Over the last four months, equities have done extremely well with the Dow Jones Industrial Average up 20 per cent; the Standard and Poor’s 500, 23 per cent; and the Straits Times Index (STI), 56 per cent.

Our property market has also picked up with queues forming outside some new show flats. HDB resale flat prices have surged to a record high which prompted the minister of national development to caution that speculation is creeping back into the market.

What is going on? Why is the stock market going up when the economy is still struggling? Who are buying these homes in a recession? Is it the start of an economic recovery and is the worst behind us?

Singapore’s latest export data support indications that we are recovering from its deepest recession to date. Non-oil domestic exports (NODX) fell 11 per cent in June from a year ago, compared with a 12.3 per cent decline in May.

At times like this, even a slight rebound makes things look better than they are, not forgetting that the Singapore economy is expected to grow only 3.5 per cent in 2010. So why is the stock market looking bullish despite weak economic data?

The answer comes from legendary fund manager Mark Mobius and billionaire investor Warren Buffett. Both of them believe that the stock market is a leading indicator of the state of the economy. In other words, it predicts what the economy will look like in six to nine months.

I’m no economist, but I’ll share a few of my observations. The unemployment rate may be high, but it is a lagging indicator of economic activity. From past recessions, unemployment keeps rising even after an economic turnaround begins.

Singapore’s gross domestic product (GDP) fell hard in the first quarter of 2009 and was followed by large numbers of layoffs. Neither of these statistics is good news. These numbers suggest that deflation could be on the horizon. Deflation or falling prices during a recession is a troubling sign and could lengthen the recession but this does not seem to be happening.

On the property front, Singaporeans’ keen interest in property doesn’t fade even in a recession. Currently, there is plenty of liquidity and mortgage rates are relatively low. So, many are looking to buy property to take advantage of the low interest rate environment. There were reports that the private property market is well supported by HDB upgraders who only need to pay a little more to upgrade as HDB resale prices are also rising.

One important reason for the bullishness is that the market has already discounted much of the bad news. Major indexes fell more than 40 per cent last year. But this doesn’t mean the market will ignore all bad news. Unexpected news can still take the market lower. Currently, the market is responding to what the economic landscape is expected to look like in six months. As such, I believe there’s a good chance that the market is beginning a bottom-building process.

Keeping in mind that the stock market looks ahead by six to nine months, the revelations of the past year have long been digested by the market. This was also true during the Asian financial crisis when the STI fell to a low of 800 points in mid-1998. It was all doom and gloom and a few months later Singapore was in a technical recession, coupled with massive job losses and poor corporate earnings.

Stockmarket behaviour can be a sign of things to come, particularly the economy. The question here is whether we believe that the fundamentals have improved enough to merit a 9,000 in the Dow Jones, or a 900 in the S&P 500 or even a 2,600 on the STI. In other words, are stocks fully valued at this time?

For a sustained rally, there has to be real earnings growth or positive earning surprises, improving home sales, higher employment, proof that inflation will not be a major problem down the road. Until positive data becomes consistent, we can expect the markets to start and stop, go up and down with an upward bias. If the data worsens, then stocks will once again retrace their downward spiral, maybe even hitting previous lows.

In my 20 years of practice, most successful investors I know tend to focus not so much on today. What is expected to happen tomorrow is more important. In the short term, the market is unpredictable and subject to great volatility. But in the very long term, the stock market has had a strong upward bias. I don’t know of any reason to think that that would change. This is a key point that’s easily overlooked in investors’ frantic search for the direction and the ‘right’ answers that they hope will yield instant gratification.

Personally, I believe that brighter days are ahead and that, someday, most of us will look back on the past two years as a very painful period that we managed to get through. Getting to that future won’t be easy, but it will be a lot easier for people who can keep their heads when others seem to be losing theirs.

Ben Fok
CEO, Grandtag Financial Consultancy (S)

Source: Business Times, 15 Aug 2009

Q2 surge likely a one-off, say analysts

20.7% GDP growth due to restocking, volatile pharma sector, they say

SINGAPORE’S eye-catching growth figure for the second quarter is likely to be a one-off, economists have warned.

The upbeat gross domestic product figures released yesterday by the Ministry of Trade and Industry (MTI) show that, after shrinking for four consecutive quarters, the economy surged 20.7 per cent between April and June as compared to the first quarter.

But experts say that the surprise GDP hike is largely down to the traditionally volatile pharmaceutical sector and restocking.OCBC economist Selena Ling said: ‘The double-digit quarter-on-quarter GDP growth is unlikely to be repeated again, given that global demand recovery – especially from the developed economies – remains fragile.’

MTI Second Permanent Secretary Ravi Menon said: ‘It’s hard to predict production decisions in pharmaceutical plants or inventory behaviour in electronics, but it’s better to assume spikes in the second quarter will not persist – at least to the same degree.’

Economists also note that key indicators such as non-oil domestic exports and industrial production have yet to show signs of a decisive recovery.

The MTI data reveals that goods producing industries grew 0.5 per cent year-on-year after four straight quarters of decline, shooting up 44.2 per cent from the first quarter.

Services declined 4.8 per cent year-on-year, but grew 8.7 per cent quarter-on-quarter.

Singapore manufacturing shot up 49.5 per cent from the first quarter due to a rise in production of pharmaceutical ingredients and inventory restocking in the electronics sector, but shrank 2.4 per cent from the same period last year.

Financial services grew 22.8 per cent compared to the first quarter, while construction surged 32.7 per cent.

However, such upbeat findings should not be taken as the shape of things to come. And, despite the quarterly improvements, the economy shrank 3.5per cent relative to the same period last year.

CIMB-GK economist Song Seng Wun predicted biomedical pulling back after a strong quarter, calculating that the sector accounted for about three percentage points of the year-on-year figure.

So, second-quarter GDP would have contracted 6.5 per cent instead of 3.5 per cent had it not been for the biomedical sector.

DBS economist Irvin Seah noted that although the electronics sector had recovered, the rebound would likely be gradual. ‘The sector’s grinding slowly northward. We don’t expect a significant upward recovery,’ he said.

And the corner may not have turned for financial services either.

UOB economist Chow Penn Nee said: ‘The sustainability of the stock market rally has been questioned. And a retreat in the stock market in the latter half of this year might drag the financial services segment down.’

MTI added: ‘Financial services was boosted by sentiment-sensitive segments such as stock market activities. It is uncertain if these can be sustained into the second half.’

Source: Straits Times, 12 Aug 2009

Signs of a return to expansion emerge

Economy turns in better numbers than earlier estimates in 2nd quarter

SINGAPORE’S economy did better than earlier estimates in the second quarter and now looks on track to return to expansion mode by the end of the year.

The stronger-than-expected showing in the three months ended June 30 is due mainly to a manufacturing boost fuelled by the volatile drugs sector.

Economists are now predicting that Singapore is likely to see a return to positive year-on-year growth numbers in the final quarter of this year.

This is made more likely by the low base in the same period last year when the downturn began to bite hard.

The Ministry of Trade and Industry (MTI) announced yesterday that quarterly growth came in 20.7 per cent higher compared with the disastrous first three months of this year.

When compared with the same period last year, the economy shrank 3.5 per cent. Overall, it contracted 6.5 per cent in the first half of this year.

Flash estimates out last month had been a little weaker, showing quarter- on-quarter growth of 20.4 per cent and a year-on-year slide of 3.7 per cent.

‘The economy has probably bottomed out and we are past the worst of the recession,’ MTI Second Permanent Secretary Ravi Menon said yesterday.

The bright second-quarter data was boosted largely by manufacturing, which shot up 49.5 per cent compared to the previous quarter after plunging 18.5 per cent in the first three months.

Manufacturing growth was propelled by a surge in the production of active pharmaceutical ingredients and a rise in inventory restocking in electronics.

Financial services improved markedly, growing 22.8 per cent from the first quarter, giving a lift to the services sector.

Most economists expect expansion later in the year.

Mr David Cohen, an economist at Action Economics, said this turnaround will probably take place in the fourth quarter, owing to the low base last year.

Some optimists say growth could kick in as early as the third quarter. A recent BT-UniSIM Business Climate Survey predicted that the economy may grow up to 1.8 per cent in the third quarter.

Citigroup economist Kit Wei Zheng said economic output, or gross domestic product (GDP), would have to surge at least 15 per cent quarter-on-quarter in the period ending Sept 30 to give a positive year-on-year figure.

‘This would be challenging under the current conditions of developed economy deleveraging, but not inconsistent with Singapore’s past recoveries,’ he added.

MTI is sticking to its recently revised 2009 growth forecast for the economy to contract by 4 to 6 per cent. The forecast was upgraded last month from the 6 to 9 per cent decline predicted in April.

Mr Menon said Singapore will hit close to the -4 per cent mark if GDP stays around the current level in the second half of the year.

However, the economy may decline close to 6 per cent if there is a dip in the third or fourth quarter, he said.

HSBC economist Prakriti Sofat calculated that to reach the top end of the forecast range, GDP just needs to be flat in quarter-on-quarter terms for the third and final quarters.

A 4 per cent full-year contraction can also be achieved even if the economy shrinks 4 per cent in the third quarter year on year and grows 1 per cent in the final three months, said DBS economist Irvin Seah. He added: ‘This seems pretty easy to achieve, especially if the global economy continues to recover and we see a mild pullback for pharma.’

Overall, MTI’s outlook remains cautious. Mr Menon said: ‘The recovery will be neither quick nor strong. Fundamental weakness in final demand in advanced economies is likely to constrain the pace of recovery in regional and domestic economies.’

Meanwhile, trade agency IE Singapore said non-oil domestic exports slumped 14 per cent in the second quarter relative to the same period last year but grew 7.6 per cent from the first quarter.

It revised its 2009 forecast for such exports, predicting that these may decline between 10 per cent and 12 per cent, less than its previous prediction of -10 to -13 per cent.

Source: Straits Times, 12 Aug 2009

MTI refuses to get carried away by Q2 rebound

Recent surge likely one-off; no firm signs of upturn in external demand

(SINGAPORE) The numbers here finally show a decisive rebound. But, with no sign of any strong pick-up in external demand, the Ministry of Trade and Industry (MTI) remains decidedly cautious about the outlook: Recovery in the second half of the year will probably be sluggish and modest, it says.

While the second-quarter GDP numbers have come in slightly better than the earlier flash estimates – down 3.5 per cent year on year but up an adjusted 20.7 per cent quarter on quarter – and the exports outlook has improved a little of late, MTI’s assessment of Singapore’s near-term prospects hasn’t fundamentally changed, the ministry’s second permanent secretary Ravi Menon told a media briefing yesterday.

As in July when MTI upgraded its GDP forecast to a 4 to 6 per cent contraction, the growth outlook remains ‘weak and subdued’, he said.

The Q2 uptick, to begin with, is likely to have been exceptional and can’t be expected to persist in Q3 and Q4, he added.

The manufacturing ‘resurgence’ in Q2 – it grew nearly 50 per cent over Q1 – came largely from a sharp spike in pharmaceutical output and electronics restocking, as has been well noted. And pharma orders tend to be driven by firms’ own production decisions rather than external demand.

Plus, indicators of final demand remain weak, Mr Menon pointed out.

While the Singapore economy has ‘probably bottomed out’ and ‘we are past worst of the recession’, with more green shoots of recovery in sight, the encouraging indicators are mostly forward-looking or tied to sentiment.

‘They do not reflect recovery in actual demand conditions,’ said Mr Menon of the uptrend in, for instance, the OECD composite leading index, China’s purchasing managers’ index, the uptick in US housing prices, and rebound in global asset markets.

US personal consumption, on the other hand, hasn’t yet picked up and the US labour market remains very weak, he noted. ‘The lynchpin for a global economic recovery remains US private consumption.’

Given the weak final demand in the advanced economies, recovery in the regional and domestic economies will be ‘neither quick nor strong’, he said.

Singapore’s forecast of 4 to 6 per cent contraction for 2009 reflects this subdued outlook, which Mr Menon believes will likely persist into 2010.

‘We will hit close to minus 4 per cent if the level of GDP stays at around the current level in the second half of the year,’ he said.

But if the economy dips in Q3 or Q4, the contraction will be closer to 6 per cent.

Speaking at an event at Jurong Shipyard yesterday morning, Trade and Industry Minister Lim Hng Kiang warned that it is too early to cheer or celebrate the Q2 economic rebound.

‘The path to a full and sustained recovery ahead will be a challenging one,’ he said.

Economists all see MTI as being highly cautious. Goldman Sachs’ analysts, for example, note the improved trade and domestic demand in Q2, with a smaller fall in consumption and investment.

MTI’s Mr Menon also basically dismissed the need for more policy stimulus. Indeed, given the current recovery trajectory – slow but steady – the debate elsewhere has in fact turned to whether it’s time to withdraw the pump-priming.

As OCBC Bank economist Selena Ling notes, ‘we cannot discount the possibility that some of the currently ample fiscal and monetary policy stimulus may be withdrawn, albeit likely in a gradual manner, in 2010 when the recovery trajectory is more firm’.

For now, however, liquidity in the banking system will be kept higher than usual, with a return to normal levels only later, a Monetary Authority of Singapore official said yesterday.

While MTI is guarded, most economists are cautiously optimistic that the economy may continue to pick up sequentially in Q3 and Q4, if not quite at the spectacular Q2 pace.

Morgan Stanley’s economists believe that Singapore’s ‘upcoming’ recovery is likely to be uneven, but its rebound in 2010 will probably be sharper than the neighbouring economies’.

Source: Business Times, 12 Aug 2009

Singapore economy expanded by 20.7% in Q2

SINGAPORE: Singapore’s economy grew faster than expected in the second quarter. Growth came in at 20.7 per cent on year, better than the initial estimate of 20.4 per cent announced by the government in July.

The growth snaps four straight quarters of contraction, but the government has warned that the recovery will be neither quick nor strong.

The volatile biomedical sector gave the Singapore economy a shot in the arm in the second quarter. Greater inventory restocking in the electronics cluster also helped to push the growth figures upwards.

Output in the key manufacturing sector during the three months to June jumped by 49.5 per cent after falling 18.5 per cent in the previous quarter.

The data suggests that the worst may be over, but government officials said it is uncertain if the strong performance can be sustained into the second half.

Ravi Menon, Second Permanent Secretary for Trade and Industry, said: “It is hard to predict production decisions in pharmaceutical plants, especially if they are not driven by external demand factor, or inventory behaviour in electronics.

“The fundamental weaknesses in final demand in advanced economies are likely to constraint the pace of recovery in regional and domestic economies.”

The government expects the subdued recovery in the second half of the year to continue into 2010. But for now, there is no need for an extra stimulus package to prop up the economy.

The government is also maintaining its forecast that the economy will contract between 4 and 6 per cent for the whole year.

On Saturday, Prime Minister Lee Hsien Loong said in his National Day message that the Singapore economy contracted by 6.5 per cent in the first half of the year.

Analysts said the Singapore economy is likely to grow at a more realistic pace of single digits in percentage terms in the next two quarters. They noted that downside risks remain, including asset price inflation.

Tai Hui, regional head of research at Standard Chartered Bank, said: “Our suggestion or proposition is not necessarily to hike rates aggressively for now, but rather find ways to reduce the amount of speculation in the markets.

“This could be via fiscal measures such as withholding tax or property gain tax, or to ringfence the real economy from the financial market volatility – for example, better investor protection as well as trying to reduce the real economy’s exposure to the ups and downs of interest rates and the stock market.

A sustained pickup in US consumption is also seen as key, while China will also feature significantly.

DBS Bank economist, Irvin Seah, said: “Asia enters the recession in a significantly stronger position. Based on the data that we have for the first half of this year, China has already surpassed the US as our largest non-oil domestic market.”

On the jobs front, Singapore’s unemployment rate stood at 3.3 per cent at the end of June. But the government does not rule out further retrenchments in the second half, given the subdued economic outlook.

The Ministry of Trade and Industry said employment contracted by 12,400 in the second quarter, double the losses of 6,200 a quarter ago.

Source: Channel News Asia, 11 Aug 2009

Singapore to see "sluggish" economic rebound

SINGAPORE – Singapore’s economy performed better than estimated in the second quarter, but recovery will be “sluggish” on continued weak demand from the United States and Europe, the government said Tuesday.

The trade-reliant economy expanded by a seasonally adjusted 20.7 percent in the June quarter from the previous three months, better than the estimated growth of 20.4 percent released last month.

The expansion marks Singapore’s first quarter-on-quarter growth in five quarters and analysts said this suggests the economy is emerging from its worst recession since independence 44 years ago. It followed a quarter-on-quarter dive of 12.2 percent in the first three months.

Second quarter performance was underpinned by strong gains in the manufacturing sector, where output climbed 49.5 percent compared with the previous quarter’s contraction of 18.5 percent.

Manufacturing growth was powered by a surge in the production of active pharmaceutical ingredients used in medicines worldwide and a rise in inventory restocking in electronics.

The construction sector grew 32.7 percent on the back of a resilient property market and the ongoing building of two integrated resorts in the city-state.

However, gross domestic product (GDP) in the three months to June was still down 3.5 percent year on year, the Ministry of Trade and Industry (MTI) said, indicating that any recovery would be fragile.

In the March quarter, GDP shrank 9.5 percent from the same point in 2008.

The MTI noted that industrial production and consumption in Singapore’s key export markets such as the United States and Europe are still weak and unemployment remains high.

“Without a turnaround in these demand-led indicators, any economic recovery in the second half of the year will probably be sluggish and modest,” the ministry said.

As a result, the government is maintaining its forecast for the economy to shrink between 4.0 and 6.0 percent this year.

“While we are probably past the worst of the economic crisis, we have not fully recovered and we do not expect economic recovery from this severe downturn to be quick,” Trade and Industry Minister Lim Hng Kiang said.

Despite the quarter-on-quarter GDP rise, Mr Lim cautioned that “it is too early to cheer as Singapore is an open economy which is dependent on world trade as well as regional and international developments.”

In a separate statement, the government’s trade promotion body International Enterprise Singapore (IE Singapore) said key exports rose a seasonally adjusted 7.6 percent in the June quarter from the previous three months.

But compared with the previous year, non-oil domestic exports fell by 14 percent on lower shipments of electronics and non-electronic goods, it said.

Total external trade was up 3.8 percent from the preceding quarter but down 27 percent from a year earlier.

Singapore became the first Asian economy to slip into recession in the second half of last year after a financial and economic crisis that started in the United States hit demand for its exports.

- AFP

Source: Channel News Asia, 11 Aug 2009

GDP may grow up to 1.8% in Q3: survey

Construction sector shows least pessimism

(SINGAPORE) Business confidence is on the mend. All indicators of the latest BT-UniSIM Business Climate Survey trended upward in Q2. And, the survey’s results predict that Singapore’s GDP will stage a turnaround with growth of up to 1.8 per cent in the third quarter.

The survey, now in its 14th year, polled 173 companies here in early July on their business prospects for the coming six months, as well as sales, orders and profit performance in the second quarter.

The business prospects indicator, in particular, has been found to be closely correlated to the GDP growth rate in the following quarter. Survey director Chow Kit Boey said that correlation now predicts GDP growth of between 0.8 and 1.8 per cent on a year-on-year basis in the third quarter.

That would signal the recession’s end after three quarters, as GDP began contracting in Q4 last year. ‘If this materialises, then the latest recession has the same duration as that in 1998 (caused by the Asian financial crisis), is less widespread, but is more intense in terms of the rate of contraction in GDP,’ Ms Chow observed.

Today, the Ministry of Trade and Industry is expected to announce a slight downward revision to advance estimates of a 20.4 quarter-on-quarter rise and 3.9 per cent year-on-year contraction in GDP, in the second quarter.

Waning pessimism has already been seen in the results of recent business expectations surveys conducted by government agencies for both manufacturing and services sectors. Results from the BT-UniSIM survey in Q2 painted a similar picture.

It found that a net balance of 28 per cent of companies polled saw business prospects deteriorating further in the second half of this year. This was a 29 percentage point improvement over Q1′s negative 57 per cent. The net balance is the difference between the proportion of positive and negative responses polled.

Ms Chow noted that the business prospects net balance indicator has in fact retreated to the negative 25 per cent level recorded a year ago in Q2 2008.

Improved sentiment was widespread, regardless of size and ownership of firms and the markets they do business in.

Firms were, however, marginally less pessimistic about business prospects overseas than locally. ‘This is probably owing to the better performance of some Asian countries,’ Ms Chow said.

Activity indices – sales, profits and orders or new business, all halted their decline in the second quarter, the survey showed. But contraction continued, as indicated by negative net balances.

The overall net balance for sales and profits rose three points each from the first quarter to reach minus 54 per cent and minus 55 per cent respectively. The net balance indicator for new orders too, rose four points to reach minus 62 per cent.

‘The implication is that business activities may start to pick up in the third quarter,’ Ms Chow said.

Breaking down the firms surveyed by the sector they belong to, Ms Chow said that the construction sector emerged the ‘star performer’ for a second consecutive quarter.

Large firms in the construction business posted the best performance across sectors for all indicators, registering the lowest contraction in sales, profit and orders, as well as the least pessimism.

Among small firms, those in financial and business services posted the best profit and new orders performance, while small commerce firms were the least pessimistic over business prospects.

In a supplementary section on geographic markets, the survey asked firms to indicate the country which they view as having the best prospects in their line of business for the coming year.

Overall, China was cited as having the best prospects, while Singapore’s domestic market held the second best prospects for firms. Compared to a year ago, optimism over business prospects in China has risen, while the outlook for prospects in Singapore has dimmed slightly, the survey found.

Malaysia and Indonesia were jointly third placed. Malaysia was popular among large and local firms, while Indonesia was viewed favourably by small and foreign firms.

Two other countries – the US and India – made it to the top three rankings among a significant num-ber of firms.

Other countries mentioned included Vietnam, Australia, Thailand, UAE, Japan, Philippines, South Korea, UK, Germany, Mexico, Taiwan and Saudi Arabia.

Source: Business Times, 11 Aug 2009

Job situation starting to look up

More employers expect to hire, but some sectors still languishing

WHEN the recession hit Singapore earlier this year, information technology (IT) and engineering firm PBA Group, like other companies here, froze hiring.

But PBA started hiring again two months ago, and at a higher rate than before the recession.

‘We actually went into more aggressive recruitment after the recession,’ PBA’s regional general manager, Mr Derrick Yap, told The Straits Times.

He cited employees’ lowered salary expectations and the need for PBA to allow enough time to train employees for a potential market upturn ahead as the main factors for this move.

‘Previously, many individuals’ asking salaries were unrealistic because they were benchmarked against companies such as banks. We couldn’t afford to give them that much,’ he said.

‘I feel that the market could be picking up by the end of the year, so I wanted to hire people and train them in time to prepare for that. We intend to work with them for the long term,’ Mr Yap said.

PBA is not the only company whose hiring seems to be picking up, although the big picture remains uncertain.

A wider tentative trend appears to be emerging. Many employers remain cautious but the employment situation in general is starting to look up.

The most recent Manpower Employment Outlook Survey, released quarterly, reflected an about-face in the net employment outlook for the coming three months.

The reading shot up from minus 43 per cent for second-quarter hiring to a positive 5 per cent – indicating that there are more employers who expect to increase hiring than those who expect to cut headcount further in the third quarter.

‘There has definitely been an improvement over the past few months,’ said Mr Josh Goh, assistant director of corporate services at recruitment firm GMP. ‘Instead of contract positions which were very common over the past few months, we are seeing more permanent positions…It shows that clients are more confident of hiring.’

His optimism was echoed by Ms Andrea Ross, managing director of recruiting firm Robert Walters: ‘Companies’ second quarter results have been positive, creating a positive sentiment in the market place.’

Sectors in demand

SECTORS of the economy that are recovering include finance and accounting, information and technology, engineering, health care and retail, experts said.

Mr Andrew Chan, chief executive of TMS Asia Pacific, a hospitality and tourism recruiter, added: ‘There are definitely still opportunities in the marketplace for job seekers…especially in the service industry, in anticipation of the two new integrated resorts.’

Languishing sectors

BUT some industries are still in the doldrums, such as shipping and semiconductors. Also, workers with highly specialised skill sets are still finding it difficult to secure positions.

In the semiconductor industry, ‘especially if you are from the production side, you will have difficulty’, Mr Goh said.

‘And in the engineering sector, certain niche workers may face more challenges landing a job…For these workers, their skill set is very ‘niche’ so it’s hard.’

And even though the number of available jobs has inched up of late, competition has also climbed.

Machine manufacturer Makino Asia did not freeze research and development (R&D) hiring during the downturn, and has seen applicants for these positions rise by up to 40 per cent in the past few months.

‘We are more selective now because everyone counts. Applicants have to be outstanding and a lot more prepared,’ said Mr Lim Poh Leng, Makino’s human resource section manager. Makino has employed more than 10 new R&D engineers since January.

Mr Goh said that GMP was ‘seeing an increase in job applications over the last six months compared to before the recession, for every advertised job’.

‘In the past, there were so many opportunities out there, and those holding jobs were also unlikely to apply. The pool has got wider now,’ he said, adding that it was still unclear whether the worst was now over.

Cautious outlook

MS ROSS agreed that the employment situation is not out of the woods yet. Of the apparent employment upturn, she said: ‘This may be a short-term effect and it may dip again.’

The founder and managing director of NeXT Career Consulting Group, Mr Paul Heng, cited Seagate’s recent announcement that it will lay off 2,000 workers.

‘Companies still remain cautious about hiring extra staff, because from a business perspective they don’t know what will happen in the future. They also are continuing to fire people. Is the worst over? Far from it, and that’s the understatement of the year.

‘Job seekers need to take unconventional approaches and not rely on jobs that are in the open market, that are publicised, but also try to find jobs in the hidden market.’

Source: Straits Times, 10 Aug 2009

Economy better, but tests ahead, says PM

First-half growth at -6.5% ‘less bad than feared’; full-year outlook still -4% to -6%

Singapore is now in a stronger economic position after a turbulent start to the year, thanks to a united response from Singaporeans and a slew of government measures that cushioned the impact of the downturn.

Prime Minister Lee Hsien Loong presented this reading of Singapore’s situation in his National Day message televised last night.

These factors, along with a ‘somewhat stabilised’ global situation, helped the economy bounce back strongly in the second quarter this year.

‘As a result, growth in the first half of the year was minus 6.5 per cent – a very significant contraction, but less bad than we had feared,’ he said.

Maintaining the Government’s growth projections for the year – revised last month by the Trade and Industry Ministry – he said the economy ‘will still shrink, but only by 4 per cent to 6 per cent’.

Previous projected growth had been minus 6 per cent to 9 per cent.

National University of Singapore economics professor Shandre Thangavelu said the forecast showed the economy was gaining stability. Positive external signs included a drop in the American jobless rate.

But Mr Lee felt it was too early to celebrate. The outlook remains clouded: Advanced economies are not expected to bounce back soon and a second wave of retrenchments is still possible.

Yet Singapore can still grow: ‘We can and must look for new ways to develop and prosper. Opportunities still exist, especially in Asia, but we need all our ingenuity and resourcefulness to find and exploit them.’

Striking an upbeat yet measured tone, he centred his 10-minute speech on two chief themes: Ways to beat economic challenges, and the imperative to stay united.

He first took stock of the response to the recession. A variety of measures included bringing forward the Budget to January and an unprecedented use of past reserves to fund job-saving schemes.

One result: Singapore has one of the world’s lowest jobless rates – 3.3 per cent – despite being one of the worst-hit economies.

‘Singaporeans too have responded resolutely and cohesively,’ he noted.

The vista of Singapore’s financial district was Mr Lee’s backdrop as he addressed Singaporeans from a lounge of the Marina Bay floating platform, the venue for today’s National Day Parade.

He said Singapore needed to find new opportunities. This was a role for the new Economic Strategies Committee, which will present its proposals next year.

Confidence was what he sought to inspire in recalling Singapore’s journey since self-government in 1959.

‘Each time we were challenged, we responded as one, everyone pulling together and working for the common good,’ he said. Each success cemented social cohesion.

From confronting the early racial riots, to the recent H1N1 flu outbreak, he said a key factor that had pulled Singapore through was unity.

‘We must work hard to strengthen it, and to bridge potential divides within our society, be it between Singaporeans and new arrivals, between rich and poor, or most fundamental of all, between the different races and religions.’

Political observer Eugene Tan said Mr Lee’s message of unity aimed to bridge divides that could widen in a downturn: ‘He was trying to remind Singaporeans that if you want a home, you need unity. With unity, we can overcome all kinds of challenges, like we have done in the past.’

Source: Sunday Times, 9 Aug 2009