The private sector started the year off with modest growth and employment prospects seemed to be picking up, according to data released yesterday.
The Nikkei Singapore Purchasing Managers' Index (PMI) came in at 51.6 in January, down slightly from 52 in December.
Readings above 50 signal an improvement in business conditions on the previous month, while those below 50 indicate a contraction.
Unlike the PMI survey released earlier this week, which covers only manufacturing firms, the Nikkei measure is based on data from research company IHS Markit, which surveyed executives at about 400 private sector firms, including those in manufacturing, services, construction and retail.
January data implied that the domestic market contributed a larger share to growth, as the expansion in new export orders eased substantially from December. Firms blamed the slowdown on subdued demand from clients in the United States and Europe.
Output growth and new business prompted firms to raise staff numbers, with employment rising in January at the fastest monthly rate on record.
But companies were pessimistic about output for the year ahead, for the first time in the survey's history, citing slowing economic conditions.
IHS Markit economist Bernard Aw said: "While increases in both permanent and temporary employment boosted job growth in January, (those surveyed) reveal that much of the growth is centred on part-time hiring."
OCBC economist Selena Ling said that the festive season likely contributed to the pickup in hiring but "some of this temporary labour may unwind in this half of the year".
Mr Aw also noted that export orders slowed markedly last month. "If new business from abroad slows or even declines in the months ahead amid growing uncertainty about global trade policy, Singapore's economic growth could be affected," he said.
Separate IHS Markit data measuring operating conditions for Asean manufacturers recorded a reading of 50 last month, up from 49.4 in December.
Operating conditions improved broadly, except in Malaysia and Singapore, where manufacturers recorded declines in output and new business.
Growth remained strongest in the Philippines, though the pace of expansion slowed. Myanmar saw the best improvement in manufacturing operating conditions for 12 months, while growth held steady in Thailand and modest expansion was seen in Vietnam. Indonesia saw a return to marginal growth.
Still, demand for Asean products has been driven mainly by domestic markets. New export orders declined for the fourth straight month in January, despite more competitive regional exchange rates.