Singapore SMEs are the backbone of the economy – representing 99% of all enterprises and hiring 71% of the workforce.
How Singapore SMEs perform is a good barometer of the state of business in Singapore, and how local employees may be affected.
The OCBC SME Index publishes a quarterly update measuring the health and performance of local businesses. Powered by real transaction data from over 100,000 SMEs, the OCBC SME Index has comprehensive across various industry value chains.
Here are 4 things we learned about Singapore SMEs from the latest OCBC SME Index report for 2Q 2024.
#1 Singapore SMEs Turned Expansionary In 2Q 2024
After 5 consecutive quarters of contraction, Singapore SMEs turned positive in 2Q 2024. Centred on a score of 50, the OCBC SME Index turned marginally expansionary with a score of 50.2.
With 7 of the 11 industries in expansion, this improvement was broad-based. Across the board, SME collections grew by 1.4% year-on-year, while payments dropped 1.3%.
In turn, the GDP Nowcast, an estimation of GDP growth based on the OCBC SME Index report, came in slightly above 3%. This is higher than the 2.7% GDP growth in 1Q 2024.
Despite this, uncertainties in the macroeconomic environment persists – leaving the index relatively flat and range-bound.
#2 SME Owners Were Less Optimistic About Business Growth
Only 47% of the 800 business owners surveyed in the OCBC Business Outlook poll expected their to perform better over the next 6 months. This was lower than the 51% recorded in the preceding quarter.
40% are expecting to remain the same, while 13% of the respondents are expecting a weaker near-term outlook.
Across industries, consumer-facing sectors – such as F&B and retail – had poorer business confidence.
#3 SMEs In 4 Industries Turned Expansionary In 2Q 2024
Export-oriented sectors, such as Transport & Logistics, Wholesale Trade and Resources turned expansionary in 2Q 2024 after 6 consecutive quarters in contraction. This lift contributed to the overall improvement in the OCBC SME Index.
Meanwhile, Healthcare grew to 50.2 even has total wage bill in the industry rose sizably in the past few months. Healthcare distributors turned expansionary for the first time after being in contraction since 4Q 2021. Nevertheless, based on the OCBC SME Business Outlook poll continued to be relatively pessimistic with nearly a quarter expecting business conditions to worsen in the near-term.
#4 ICT Industry Remained In Contraction For 8th Consecutive quarter
Despite rising to a score of 49.5, the ICT industry remained in contraction for the 8th consecutive quarter. Overall, collections slipped 18.1% year-on-year, while overall payments declined 23.8%.
The improvement in the ICT industry was driven by ICT Manufacturing and Sales (51.4), as SMEs in the segment benefitted from the ongoing pick-up in semiconductor demand.
Meanwhile IT Consultancy continued to underperform.
Read Also: 5 Worrisome Employment Trends In Singapore From The 1Q2024 Labour Market Report
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