Higher costs for Singapore manufacturers in 2025 despite some relief in labour expenses
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The manufacturing sector accounts for around 20 per cent of Singapore’s gross domestic product.
ST PHOTO: LIM YAOHUI
- Singapore's manufacturing unit business cost rose marginally by 0.1% in 2025, driven by outsourced work despite falling labour and utilities costs.
- The economy grew 5% in 2025, with 2026 growth forecast at 2%-4%, according to MTI.
- Inflation is expected to remain muted.
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SINGAPORE – Manufacturing costs in Singapore rose slightly in 2025 as companies in the sector spent more on outsourced work, even though labour costs fell, the Ministry of Trade and Industry (MTI) said on Feb 10.
Unit business cost for the sector edged up 0.1 per cent in 2025, as earlier increases offset a sharp fall in costs in the fourth quarter, MTI’s latest economic survey showed.
Unit business cost is a measure of how much it costs a business to produce each unit of a product of service.
The manufacturing sector accounts for around 20 per cent of Singapore’s gross domestic product.
The higher costs were driven by the cost of work that was outsourced or sub-contracted, which rose by 1.6 percentage points in 2025 from 2024.
Manufacturers also saw an increase in royalty payments, such as expenses for the use of intellectual property belonging to other parties.
Other costs, including advertising, commission and agency fees, as well as miscellaneous expenses, also rose.
However, labour costs for manufacturers fell.
The manufacturing sector’s unit labour cost declined by 4.3 per cent in 2025 from 2024, as an increase in worker renumeration was offset by labour productivity gains.
Despite this, unit labour cost for the overall economy will likely rise in 2026 “due to a projected moderation in productivity growth, even as remuneration per worker is expected to rise at a similar pace as that in 2025”, MTI said.
Meanwhile, the costs of utilities, fuel and transportation should moderate further in 2026, on the back of a projected decline in oil prices, it added.
MTI on Feb 10 separately announced
It also upgraded its full-year 2026 growth forecast to a range of 2 per cent to 4 per cent, from 1 per cent to 3 per cent.
Monetary Authority of Singapore (MAS) deputy managing director and chief economist Edward Robinson said at a Feb 10 briefing that part of 2025’s economic growth came from workers and companies becoming more productive, especially in manufacturing.
This helped the economy grow without pushing costs and prices up as much.
He added that imported inflation should remain subdued moving forward, with further moderation likely to be more gradual.
The MAS expects core and all-items inflation to rise to a range of 1 per cent to 2 per cent in 2026, from lower levels in 2025.
Core inflation strips out accommodation and private road transport costs, making it a better gauge of household expenses.
Strong economic growth has also helped support the labour market.
“Unemployment has been quite low, and the market has been quite resilient,” said Mr Zhuo Gangwei, divisional director of the manpower planning and policy division at the Ministry of Manpower.
“We have continued to see job growth in areas like finance and insurance, in areas like healthcare services and other services.”
However, Mr Zhuo pointed to recent comments by Deputy Prime Minister Gan Kim Yong, who had said in January that it is no longer safe to assume that growth will automatically generate jobs
