Singapore’s manufacturing sector is maintaining a positive outlook for the period from April to September 2026, despite ongoing geopolitical and economic uncertainties, including tensions in the Middle East. According to the Singapore Economic Development Board, a net weighted balance of 17% of manufacturing firms expect improved business conditions compared to the first quarter of 2026.
The precision engineering sector leads this optimism, with a net weighted balance of 51% of firms expressing confidence, driven by strong global demand for semiconductor equipment related to artificial intelligence (AI). Similarly, the electronics cluster anticipates a positive outlook, with a net weighted balance of 42% of firms buoyed by sustained AI-related demand.
In contrast, the chemicals sector is less optimistic, with a net weighted balance of 53% of firms expecting a downturn due to disruptions in feedstock supply from the Middle East. The transport engineering cluster, however, remains hopeful, with 8% of firms predicting positive prospects, particularly in the aerospace segment, which continues to see demand for maintenance, repair, and overhaul services.
Looking ahead to the second quarter of 2026, a net weighted balance of 20% of manufacturing firms project increased output. The precision engineering, electronics, and transport engineering clusters are expected to drive this growth. Meanwhile, the chemicals and biomedical manufacturing clusters anticipate a decline in production.
Employment levels are expected to remain stable, with 78% of firms planning no changes. However, the chemicals and biomedical clusters may see a reduction in hiring. Despite challenges, 66% of manufacturers plan to invest in plant and machinery over the next year, focusing on replacing worn-out equipment and expanding production capacity.
