While geopolitical developments continue to cloud the global economic outlook, business sentiments in the manufacturing sector remain optimistic, amid sustained strength in global artificial intelligence (AI)-related demand, Singapore Economic Development Board (EDB) said on Monday.
A net weighted balance of 24 percent of manufacturers maintain a positive business outlook for the period October 2026 – March 2027, with a weighted 29 percent of firms projecting improved business conditions and a weighted 5 percent foreseeing a weaker business situation, compared to the third quarter of 2026, EDB said in a statement.
The precision engineering cluster is the most upbeat, supported by semiconductor-related equipment firms which foresee global AI-related investment to continue expanding.
The electronics cluster also expects a strong outlook, driven by robust orders secured for semiconductors used in AI applications.
The transport engineering cluster expects broadly similar business conditions, with firms citing rising costs (e.g. materials, fuel, freight) and overseas competition as key headwinds to their business outlook.
The chemicals cluster is the most pessimistic, where firms in the petroleum segment remain concerned about persistent uncertainty in crude oil feedstock supply.
A net weighted balance of 34 percent of manufacturing firms expect output to increase in the fourth quarter of 2026 compared to the third quarter of 2026.
In the electronics cluster, the semiconductors and computers peripherals & data storage segments expect higher production of semiconductors and data storage products, to cater to buoyant demand from AI data centers.
Similarly, firms in the precision engineering cluster expect higher output of semiconductor-related equipment, bonding wires and metal precision components which support the global electronics industry.
Firms in the biomedical manufacturing cluster foresee higher output of active pharmaceutical ingredients and life science instruments.
All except the printing segment within the general manufacturing industries cluster project higher output. In particular, the food, beverages & tobacco segment anticipates higher export demand for milk and beverage products.
Within the transport engineering cluster, output expectations are mixed. While the aerospace and land segments expect higher level of activities, the marine & offshore engineering segment anticipates lower production of oil & gas-field equipment as geopolitical uncertainties weigh on orders.
A weighted 72 percent of firms in the manufacturing sector expect employment levels in the fourth quarter of 2026 to remain broadly similar to the third quarter of 2026.
All clusters except the biomedical manufacturing and transport engineering clusters project a larger workforce.
A weighted 23 percent of firms anticipate challenges in securing export orders in the fourth quarter of 2026.
The top two factors cited are price competition from overseas competitors and political or economic conditions from abroad (e.g. geopolitical developments, tariffs and inflationary pressures).
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