Manufacturing, services firms more upbeat but largely cautious about Q4 outlook: Survey
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Firms remain cautiously optimistic about the next six months, with some industries expecting higher revenue this quarter.
PHOTO: ST FILE
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SINGAPORE – Business sentiment in the manufacturing and services sectors continues to be more upbeat about the next six months, but firms remain largely cautious amid continued global economic uncertainty.
About 406 manufacturing firms and 1,500 companies in the services sector were surveyed by the Government.
Of the polled manufacturing firms, a weighted 23 per cent are optimistic about business conditions from October to March 2026, according to the Business Expectations of the Manufacturing Sector survey released by the Economic Development Board on Oct 31.
This was up from 10 per cent in the previous survey released on July 31 for the third quarter.
A net weighted balance of 7 per cent of manufacturers expected their output to increase from the third to the fourth quarter of 2025, up from 2 per cent in the previous survey.
Firms cited overseas price competition, as well as ongoing geopolitical tensions and tariffs, as the two biggest challenges to securing export orders.
The electronics cluster is the most optimistic within the sector and expects more output than in the last quarter. In particular, the semiconductors segment projects production to increase in order to meet sustained demand from artificial intelligence-related markets.
Precision modules and components manufacturers anticipate higher production of optical products and bonding wires, while the majority of the machinery and systems firms foresee output to remain broadly unchanged from the last quarter.
In the transport engineering cluster, the aerospace segment projects increased aircraft engine repair work, but the marine and offshore engineering and land segments forecast lower production amid continued headwinds to the global economy.
Firms in the biomedical engineering and chemicals clusters also forecast lower production in the fourth quarter, with continued weak demand for chemicals and chemical products, as well as scheduled maintenance shutdowns.
The majority of firms in the manufacturing sector also expect employment levels in the fourth quarter to remain similar to the third quarter of 2025, with hiring expansions forecast only for the electronics, transport engineering and general manufacturing clusters.
Meanwhile, most industries in the services sector expect to increase their hiring activities for the fourth quarter by a net weighted 10 per cent, according to the Business Expectations Survey by the Department of Statistics on Oct 31.
The accommodation; health services; and recreation, community and personal services industries forecast an increase in employment to meet the rising demand during the year-end festive period.
Overall, a weighted 21 per cent of firms in the sector are optimistic about business conditions, up from 17 per cent in the previous quarter.
Additionally, a net weighted 14 per cent of firms also foresee higher revenue from this period, with the wholesale trade, retail trade, accommodation, and information and communication industries anticipating the most growth.
Supermarkets and retailers are optimistic due to upcoming festive periods such as Christmas, Chinese New Year and the year-end school holidays.
Wholesalers in the computers, computer peripheral equipment and software sector anticipate higher sales from commercial sector upgrades due to Windows 11 migration and robust demand for AI-enabled systems.
Hoteliers are also optimistic on their industry outlook, anticipating growth from late 2025 to early 2026, driven by seasonal and event-driven demand for the Formula 1 race as well as festive celebrations and corporate events.
On the other hand, the transportation and storage industry expects more challenging business conditions in the months ahead. This is primarily due to water transport firms anticipating continued challenges as a result of persistent oversupply of vessels and weakening cargo demand leading to lower freight rates.
Real estate firms are also pessimistic about their outlook ahead, as they are concerned that ongoing macroeconomic uncertainties and geopolitical tensions could dampen consumer confidence.
