PUBLISHED ONJuly 31, 2026 7:50 AMUPDATEDJuly 31, 2026 1:16 PMBYSean LerManufacturing firms in Singapore remain optimistic about the next six months due to strong global artificial intelligence (AI)-related demand, despite elevated geopolitical and economic uncertainties, a survey has found.
A total of 401 manufacturing businesses were polled by the Economic Development Board (EDB) between June and July, and asked to indicate their expectation of general business conditions and other indicators such as output and employment.
According to the Business Expectations of the Manufacturing Sector survey released on Friday (Jul 31), a weighted 24 per cent of manufacturers expected conditions to improve from the second quarter, while 12 per cent anticipated weaker conditions.
Among them, precision engineering companies, led by the semiconductor-related equipment firms in the machinery and systems segment, were most upbeat — with a weighted balance of 55 per cent — on the back of strong global AI-related investment.
This was followed by firms in the electronics cluster, particularly those in the semiconductor segment, with 19 per cent of companies expecting favourable conditions, supported by robust demand for semiconductors used in AI applications.
As compared to sentiments in the previous poll, sentiments in the precision engineering sector were up by 4 per cent, but those in the electronics cluster was down by 23 per cent.
The chemicals cluster is most pessimistic, with 25 per cent of companies expecting the business environment to worsen further, as firms in the petrochemicals and petroleum segments continue to anticipate feedstock supply disruptions from the Middle East.
They also expect disruptions to keep costs elevated and compress margins.
To a lesser extent, concerns over rising costs such as in materials, fuel and freight, have also cast a guarded forecast for firms in general manufacturing and transport engineering.
A net weighted balance of 26 per cent of manufacturers are expecting their output to increase in the third quarter of 2026, up from the 20 per cent forecast for the second quarter.
Among businesses in the manufacturing cluster, those in precision engineering, electronics and transport engineering are again projecting an increase in production, while the chemicals and general manufacturing firms continue to anticipate a decline.
Overall, a weighted 24 per cent of firms anticipate challenges in securing export orders in the third quarter of 2026, with the oft-cited factors of price competition from overseas competitors and political or economic conditions overseas.
Additionally, a weighted average of 74 per cent of manufacturing businesses — down slightly from the 78 per cent in the second quarter — expect their employment level for the third quarter of 2026 to remain similar to the last quarter.
With the exception of transport engineering firms, companies in all other sectors expect to hire more workers.
The electronics sector is most optimistic, projecting a 46 per cent increase in employment.
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