Singapore Manufacturers and Services Remain Upbeat on Six-Month Business Outlook

A weighted 24 per cent of manufacturers expected conditions to improve from Q2, while 12 per cent anticipated weaker conditions. This yielded a net weighted balance of 12 per cent maintaining a positive outlook for the July-to-December period, down five percentage points from the previous survey.

A net weighted balance of 26 per cent of manufacturing companies expect output to increase in Q3 compared to Q2. Businesses cited price competition from overseas rivals and external political and economic conditions, including geopolitical developments and tariffs, as the top two challenges in securing export orders.

Among the manufacturing clusters, precision engineering was the most upbeat, led by semiconductor-related equipment companies in the machinery and systems segment amid strong global investment in artificial intelligence. The electronics cluster also remained optimistic, with semiconductor companies expecting favourable conditions on robust demand for chips used in AI applications. The chemicals cluster was the most pessimistic, citing rising material, fuel and freight costs and continued Middle East feedstock supply disruptions.

Services companies reported a net weighted balance of 13 per cent expecting a more favourable business outlook for July to December, rebounding from minus 4 per cent for the April-to-September period in the previous survey. The earlier survey was conducted after the US-Israel-Iran conflict began on 28 February.

All services industries expected operating revenue to improve from July to September. Accommodation companies were particularly upbeat, expecting major events such as Formula 1 and concerts, as well as seasonal travel demand, to boost visitor arrivals and hotel occupancy.

Wholesale trade businesses were similarly optimistic, with telecommunications and computer wholesalers expecting enterprise adoption of AI to drive demand for AI-optimised servers, storage and networking solutions. Professional services companies likewise anticipated favourable conditions over the next six months, while accounting firms expected audit engagements to peak in the second half.

A weighted 74 per cent of manufacturers expected employment levels in Q3 to remain broadly unchanged from Q2. All clusters except transport engineering projected an increase in their workforce.

The services sector similarly maintained a positive employment outlook for Q3, with a net weighted balance of 10 per cent, the Department of Statistics said. Administrative and support services companies expected hiring to increase in cleaning, landscaping and security segments, while recreation, community and personal services companies planned to hire more workers in response to higher demand for healthcare and childcare services.