The manufacturing sector remains cautiously optimistic about business sentiments in the first half of the year, according to a statement released by Singapore Economic Development Board (EDB) on Monday (Feb. 2).
“A weighted majority of 63 per cent of manufacturers expect business conditions to remain broadly stable in the January – June 2026 period,” the statement said.
The statement also said a weighted 24 per cent foresee an improved business outlook while a weighted 13 per cent expect weaker business prospects.
“This translates to a net weighted balance of 11 per cent of manufacturing firms projecting a better business situation in the first half of 2026 compared to the fourth quarter of 2025.”
Businesses in the electronics industry are the most optimistic while biomedical firms are the least optimistic about business sentiments in the first half of the year.
The electronics cluster saw a net weighted balance of 33 per cent of firms predicting a positive business outlook, “largely driven by the semiconductors segment, on the back of sustained artificial intelligence (AI)-related demand, despite concerns over trade tensions and US tariffs.”
A net weighted 10 per cent of firms in the transport engineering cluster expressed positive outlook due to continued strong demand for aircraft maintenance as well as repair and overhaul (MRO) services in the aerospace segment.
The biomedical manufacturing cluster saw a net weighted balance of 8 per cent of firms with a positive outlook, largely driven by higher exports in the pharmaceuticals segment.
Firms in the chemical cluster expressed the most uncertainty, with a net weighted balance of 17 per cent expecting a weaker business outlook due to macroeconomics uncertainties weighing on demand and margins of refined petroleum products.
In terms of output forecast for the first quarter of the year, 6 per cent of manufacturers expect an increase in output with optimism expressed in all clusters except for the chemical and general manufacturing industries.
A weighted 22 per cent of firms in the manufacturing sector anticipate challenges in obtaining export orders in the first quarter, citing the top two factors of “price competition from overseas competitors and political or economic conditions abroad,” stemming from “geopolitical tensions and uncertainties over tariffs.”
Employment in the first quarter of the year is expected to remain the same as the previous quarter.
“A weighted majority of 80 per cent of firms in the manufacturing sector expect employment levels in the first quarter of 2026 to remain similar to the fourth quarter of 2025,” according to the statement.
The electronics, transport engineering and precision engineering clusters plan to hire more workers.
The other clusters in the manufacturing sector expect to maintain or reduce their workforce.
