Professional, administrative and support services in S'pore to see muted recovery in 2021

SINGAPORE – The professional services and administrative and support services sectors are expected to recover this year, but are unlikely to reach pre-pandemic levels given the continued sluggishness of the travel and construction industries.

Slow lifting of international travel restrictions is expected to weigh on the recovery of some professional services segments – such asbusiness and management consultancy – while the likes of rental and leasing of construction machinery and equipment within the administrative and support services sector are predicted to take a hit.

These insights were shared in the Ministry of Trade and Industry’s quarterly economic survey that was released on Tuesday (May 25), in an article focusing on the performance and outlook of the professional services and administrative and support services sectors in Singapore.

The two sectors provide a wide variety of essential services for business operations, such as accounting and advertising services. Combined, they accounted for over 10 per cent of the overall economy’s nominal value-added in 2020.

Both contracted sharply last year, due to the economic fallout from the coronavirus pandemic, despite outperforming the Singapore economy from 2014 to 2019.

While there are some positive signs for the two sectors, such as general recovery in domestic and regional economic activity, the continued bleak outlook for travel and construction is likely to dampen recovery.

But the prospects for the professional services sector remain bright in the longer term, MTI said, adding that the administrative and support services sector will also continue to play an essential role in supporting the business operations of the various sectors of the Singapore economy.

The professional services sector is more dependent on external demand, while the administrative and support services sector is more reliant on intermediate demand from other sectors such as manufacturing and wholesale trade.

Slump in 2020

The professional services sector recorded an overall contraction of 9.7 per cent last year, largely due to contraction in the architectural and engineering, technical testing and analysis, and the other professional, scientific and technical services segments.

This came as a result of the sharp plunge in construction works and contracts awarded last year, as well as decline in demand for advertising and market research activities amid cutbacks in spending among businesses during the downturn.

The administrative and support services sector, meanwhile, was weighed down by the decline in the real value-added of the rental and leasing segment, which was affected by global travel restrictions, slower work progress at construction worksites, and weaker domestic economic conditions.

Real value-added of both sectors continued to remain below pre Covid-19 levels in the first quarter of 2021 given the ongoing effect of the pandemic, MTI noted.

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