[SINGAPORE] Singapore’s small and medium-sized enterprises (SMEs) remained in expansionary territory in the third quarter, supported by growth in externally oriented sectors.
Firms involved in wholesale trade, information and communications technology (ICT), and manufacturing continued to post gains, based on findings from the latest OCBC SME Index released on Tuesday (Oct 14).
In contrast, most domestic-facing industries saw a slight pullback on softer local demand, the bank noted.
The quarterly index, which tracks the business health and performance of SMEs, held steady at 50.5, unchanged from the previous quarter.
A reading above 50 indicates an expansion in business activity from a year ago, while a score below that marks contraction.
This also marked the second straight quarter of expansion, following a brief dip to 49.9 in the first quarter.
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OCBC said that SMEs maintained a “relatively healthy pace of growth” in the latest quarter, with customer collections rising 8.5 per cent year on year and payments up 6.4 per cent.
The ICT sector turned expansionary for the first time in three years, registering a reading of 51 after 12 consecutive quarters of contraction. The reversal signals “renewed growth momentum” among local SMEs engaged in digital economic activities, noted OCBC.
Manufacturing SMEs improved slightly to 50.9 in Q3 from 50.6 in the second quarter, while those in wholesale trade stayed in growth territory at 51.2, compared with 51.3 previously.
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On the domestic front, building and construction, as well as business services, slipped into contraction at 49.9 points each, after expanding at 50.3 and 50.5, respectively, in the previous quarter.
Food and beverage operators also fell into contractionary territory at 49.4, down from 50.6 in Q2.
Improved sentiment
A separate OCBC poll of 800 SME business owners showed sentiment improving slightly in Q3.
Some 53 per cent expect conditions to stay the same or worsen over the next six months, down from 57 per cent in Q2, while 47 per cent foresee an improvement, up from 43 per cent previously.
Eric Ong, head of enterprise banking, global commercial banking at OCBC, said: “As global trade dynamics continue to evolve, we expect the outlook for SMEs to ease in the coming quarters as they contend with challenges from supply chains and US tariffs.
“With demand for tech such as artificial intelligence, digital platforms and software development continuing to rise, there are opportunities for SMEs to seize if they pivot to these frontier sectors.”
