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SMEs Expect 2014 to be Better for Sales and Profits

  • SMEs still expect hiring to slow

13 January 2014 [Singapore] – Singapore’s SMEs expect to start 2014 on a bright note, with business optimism at its highest level in three years.

This is the key finding of the latest SBF-DP SME Index, a joint initiative of the Singapore Business Federation (SBF) and DP Information Group (DP Info). It is a six months forward-looking Index which measures the sentiments of SMEs.

The current Index tracks SME sentiments for January to June 2014 and is based on 3,000 interviews with SME owners and managers, and the financial performance of SMEs. Five industry sectors are tracked – Business Services, Commerce/Trading, Construction/Engineering, Manufacturing, and Transport/Storage.

The Overall Index for this quarter rose 0.5 per cent to 55.0 - the highest score since Q3 of 2011. A score above 50 per cent indicates that SMEs have a positive outlook for their business prospects for the next six months.

The Construction/Engineering sector was the only industry which had moderated expectations, from 57.4 in the last quarter to 55.3 for the first half of the new year. This demonstrates that the Construction/Engineering SMEs expect a slight temperance of their business expectations, on the back of comparatively fewer private sector activities anticipated in 2014.

Key indicators measured by the Index improved, with the exception of hiring intentions which declined, and capital investment which remained stable. Hiring expectations fell from 5.69 last quarter to 5.55 this quarter.        

Ms Chen Yew Nah, Managing Director of DP Information Group said, “ SMEs expect the global economy to continue to grow, albeit at a modest pace.

They expect their sales and profits to improve and their businesses to expand during the next six months."

"The Commerce/Trading sector is the most optimistic which indicates enthusiasm for an increase in regional trade throughout the first half of the year."

"One area SMEs expect to be less active is in making new hires. This is partly an adjustment to a tighter labour market where SMEs are struggling to get the best talent and working on productivity improvements to reduce dependence on labour.”

Mr Ho Meng Kit, SBF CEO said, "It is clear that Singapore businesses are riding the tide of a more positive global outlook with our SMEs more confident about their prospects for the new year.”

“SMEs should seize this opportunity of growth by strengthening their competitiveness through innovation and internationalisation.”

“As inflationary pressure remains high, small businesses are looking to policy makers to introduce measures to rein in rising business cost and tight labour constraints.” he added.

Table 1: Outlook for 1Q14-2Q14 F (January 2014 to June 2014)            

Appendix A - Index


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