According to the GDP “Nowcast” by OCBC, Singapore’s GDP is projected to be at -0.3%. This is the worst, and first negative, GDP projected since OCBC first started its OCBC SME Index in 1Q2021.
Nevertheless, the economic outlook for various industries is uneven. Many sectors continue to be buoyed by domestic demand, while outward facing industries are being dragged by sluggish external demand.
According to the OCBC SME Index 2Q2023 (released in July 2023), these are the four best-performing business sectors.
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#1 Building & Construction
Growing at a healthy pace of 51.3, the best performing business sector in 2Q2023 is the Building & Construction industry. Readings above 50 in the OCBC SME Index signifies improved business activity while those below 50 indicates deteriorating in business activity.
Source: OCBC SME Index 2Q2023
SMEs in Building & Construction industry have benefitted from a steady pipeline of both public and private projects. They were also able to complete projects following a return in manpower to pre-pandemic levels in the sector.
Within the Building & Construction industry, all sub-segments registered improved business activities. In particular, SMEs in the construction segment saw collections and payments improving 15.0% and 13.0% respectively.
| Industry | OCBC SME Index 2Q2023 |
| Building & Construction | 51.3 |
| – Construction | 51.2 |
| – Investment Companies and Operators | 51.2 |
| – Building Materials | 50.5 |
| – Other Building & Construction | 51.7 |
#2 Education
The Education industry was the second-best performing industry in Singapore. Despite witnessing a growth in the sector, the OCBC SME Index 2Q2023 found that overseas collections fell by 27% compared to last year. This was not unexpected, as 40% of business owners in the sector cited inflation as the biggest challenge in the next six months.
All segments, with the exception of Formal Education & Commercial Schools, within the Education industry registered a reading above 50.
| Industry | OCBC SME Index 2Q2023 |
| Education | 50.8 |
| – Early Childhood Education | 50.7 |
| – Training Centres | 50.6 |
| – Recreation Classes | 50.7 |
| – Formal Education & Commercial Schools | 49.4 |
| – Other Education | 51.2 |
#3 Business Services
After strong growth since mid-2022, the Business Services industry tapered to a reading of 50.2. Nevertheless, this is still a healthier performance compared to the previous quarter.
Two segments within the Business Services industry saw poorer business activities. These were SMEs in Business Consultancy and Accounting and Legal segments.
Meanwhile the strongest performance among all sub-segments also came from the Business Services industry – with the Other Business Services registering a reading of 52.0.
| Industry | OCBC SME Index 2Q2023 |
| Business Services | 50.2 |
| – Business Consultancy | 49.2 |
| – Advertising and Exhibition | 51.7 |
| – Accounting and Legal | 49.8 |
| – Other Business Services | 52.0 |
#4 F&B
The F&B industry – with a reading of 50.1 – rounds off the list of positive-performing business sectors in Singapore. The overall reading for the F&B industry was pulled down by SMEs in the F&B Wholesale Trade, which saw a reading of 46.5. This was the worst reading among industries that registered positive business activities in 2Q2023, and the third-worst sub-segment readings overall.
According to the OCBC SME Index 2Q2023, almost a third of F&B businesses have insufficient cash balances to cover 6-months of operations.
While many business segments witnessed a tapering in business activities, the F&B Retail segment has displayed continued strength. Business activities within the sector has improved 5 consecutive quarters – in spite of the overall tapering in business activities.
| Industry | OCBC SME Index 2Q2023 |
| F&B | 50.1 |
| – F&B Services | 51.8 |
| – F&B Wholesale | 46.5 |
| – F&B Retail | 51.3 |
| – Other F&B | 51.6 |
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