Firms in S'pore's services, manufacturing sectors are cautiously optimistic about outlook ahead
Singapore manufacturers remain largely cautious about business conditions in the next six months, due to tariffs and economic uncertainty.
SINGAPORE – Business sentiment in Singapore's services and manufacturing sectors have turned slightly more upbeat, although most firms are still largely cautious amid ongoing trade tensions and tariff uncertainties.
According to the Business Expectation Survey released by the Department of Statistics on July 31, 17 per cent of firms are optimistic about business conditions from July to December , while 15 per cent are pessimistic. The rest expect conditions to remain the same.
The percentages are weighted based on the companies' operating revenue and value added.
Although only a weighted two percent more firms are expecting a better outlook, this is a significant turnaround from the -17 per cent reported in the previous survey for the April to September period.
The most optimistic industries are accommodation, retail trade, as well as r ecreation, community and personal services.
Hoteliers and retailers stand to benefit the most from concerts, trade and major sporting events like F1, which are set to pack the second half of the year. The year-end festive season is also likely to fill hotel rooms and boost retail sales.
The accommodation industry also expects to increase hiring in the third quarter to keep pace with the arrival of more tourists for upcoming events.
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In contrast, the transportation and storage industry is foreseeing a more challenging environment for the rest of the year .
Water transport firms, including freight shipping companies as well as tugboat and barge operators, are particularly cautious about the geopolitical uncertainties.
They expect lower demand for their services due to front-loading activities, as many have rushed to ship goods ahead of anticipated US tariff hikes.
Air and land transport firms, however, are more positive about their outlook.
US tariffs and other policy uncertainties also continue to dampen confidence in the finance and insurance industry.
Banks remain cautious, although payment processing firms expect a rise in transaction volumes and revenue driven by the e-commerce market's continual expansion.
In another business sentiment survey by the Economic Development Board, also released on July 31, most firms – a weighted 85 per cent – expect a broadly similar operating environment in the second half of 2025.
A weighted 10 per cent of them expect business conditions to improve, while a weighted five per cent foresee a weaker outlook.
The electronics and precision engineering clusters anticipate stronger demand for semiconductors and related equipment amid the artificial intelligence boom.
On the other hand, chemicals manufacturers remain concerned that trade policies could reduce export demand for their products.
Along with the general manufacturing cluster, they do not project an increase in production for the rest of the year.
In terms of the hiring outlook for the third quarter, the electronics, transport engineering and general manufacturing clusters plan to employ more workers, while others foresee their workforce to shrink or remain the same.
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