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  • SME Sentiments Dip for Third Consecutive Quarter

SME Sentiments Dip for Third Consecutive Quarter

The Overall Index Score for the second half of 2015 fell from 54.0 to 53.5 – its lowest level since the start of 2013.

  • Uncertainties and domestic pressures keep SMEs outlook muted

23 June 2015
[Singapore] – The business outlook among SMEs has moderated further for a third consecutive quarter, according to the latest SBF-DP SME Index.

The Overall Index Score for the second half of 2015 fell from 54.0 to 53.5 – its lowest level since the start of 2013.

The Index measures the business sentiment of SMEs for the next six months and is a joint initiative of the Singapore Business Federation (SBF) and DP Information Group (DP Info). Some 3,600 SMEs were interviewed.

Four of the six industries included in the Index – Commerce/Trading, Manufacturing, Retail/F&B, and Transport/Storage – are all less optimistic than they were three months ago, while for Business Services companies, the outlook remains the same. 

Only the Construction sector bucked the trend with a slight increase in its Index Score from 53.6 to 54.0.

Mr Lincoln Teo, Chief Operating Officer of DP Info said SMEs are less optimistic but have yet to sink into pessimism. 

“We believe that despite demand, hiring pressures have forced some SMEs to cut back their capacity, resulting in a moderation of expectations for the next two quarters. The small movements in the Index score which indicates SMEs expect more of the same for the second half of the year. While optimism is declining, this is most likely due to an absence of good news than any particular piece of bad news."

“The Government’s sustained push on productivity and lifelong learning is underpinning the confidence of the services sector. And the commitment to infrastructure development is boosting sentiment among construction firms,” Mr Teo said.

 Outlook for 3Q15 – 4Q15F (July 2015 to December 2015)

Outlook for 3Q15 – 4Q15F (July 2015 to December 2015)

Construction and Business Services

While the Index shows a general decline in SME sentiment, there are two industry sectors indicating they expect a better business performance in the next two quarters.


Construction is the only sector where overall business confidence increased during the quarter (from 53.6 to 54.0).

The Construction sector is benefiting from infrastructure spending as well as the push to raise skill levels.  There has also been an increase in public construction activity.  As a result the Turnover Outlook Score for the Construction sector increased moderately from 5.56 to 5.59.

However, the Profitability Expectations of the Construction sector dipped from 5.47 to 5.33 as a result of higher operating costs with changes to  foreign labour polices and a more competitive sector.

Business Services

Overall sentiment among Business Services companies remained unchanged at 54.4.  This is the highest Overall score of any of the six industries included in the Index.

Business Services are also the only sector which saw an improvement in their outlook for both Turnover (from 5.63 to 5.75) and Profitability (5.49 to 5.64).  

Like Construction, the Business Services sector is seeing greater opportunities as a result of the Budget, from initiatives such as the SkillsFuture, Smart Nation and the Capability Development Grant.


Comments from SBF

Mr Ho Meng Kit, CEO of SBF said “There has been a steady decline in business sentiments of our SMEs over the last three quarters, though this drop in sentiment is not alarming.  It reflects the uncertainty in the global economy and the tough business environment locally. 

This latest survey, coupled with other findings such as the lower forecast for Singapore 2015 GDP growth and the contraction in overall employment in the first quarter of this year after five years of sustained growth, could be signs that the economy is reacting to our economic restructuring policies. This situation merits closer monitoring to avoid us slipping into economic difficulties.

Meanwhile, the Singapore Government has provided programmes and assistance to help businesses, particularly the SMEs.  I urge our small businesses to tap on these programmes fully as they can help companies improve their capabilities and overcome the challenges during this period of tepid growth.  Companies should also consider an internationalisation strategy as part of their business expansion plans.  They can participate in the various business mission trips organised by SBF.”


The overall index is recording a third consecutive decrease in business confidence, reflecting continued moderation of growth expectations in Singapore SMEs.

Continued waning confidence in hiring has forced SMEs to look toward productivity and operational efficiency measures as the two most viable solutions to meet year-end demand. They have also elected to invest capital in a bid to stave off manpower issues in the mid to long term. Correspondingly, government grants continue to drive capability development in SMEs.


Table 1: Outlook for July 2015 - December 2015

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