Smaller Singapore companies remain optimistic about the business environment, but they are a little more cautious than they were six months ago, given ongoing trade tensions, according to updated data released yesterday.

Compared with last quarter's index of 51.5, the latest overall outlook for small and medium-sized enterprises (SMEs) this quarter fell to 51. A score above 50 indicates an expectation of growth, while a score below 50 signals a possible contraction.

The SBF-DP SME Index, which measures the business sentiment of about 3,600 SMEs for the next six months, is a joint initiative of the Singapore Business Federation and DP Information Group.

It found that the manufacturing industry is more downbeat on prospects than other sectors, although they all registered a decrease in growth expectations.

Manufacturers are watching more closely the impact on profits, given fears of increased input costs.

The retail as well as food and beverage sectors have the strongest outlook due to the upcoming festive period, and the rise of online delivery platforms.

The index comprises inputs from SMEs on their expectations in seven key areas - turnover, profitability, business expansion, capital investment, hiring, capacity utilisation, and access to financing.