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Singapore Business Growth Slows in May on Cost Pressures

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Singapore Business Growth Slows in May on Cost Pressures

Singapore's business expansion moderated in May, though companies largely managed to pass record inflationary costs onto consumers thanks to robust demand.

The headline seasonally adjusted S&P Global Singapore Purchasing Managers' Index (PMI) dropped to 56.7 in May from 57.9 in April, according to data released Thursday.

A softer increase in overall new business drove the index lower. However, S&P Global noted the growth was still the second-strongest on record, with companies securing new contracts and reporting high demand for their products and services.

Singaporean companies raised their selling prices at the sharpest rate on record to offset soaring input costs.

"Strength in demand in recent months has enabled firms to pass through a healthy proportion of this price pressure to customers," S&P Global Market Intelligence economist Eleanor Dennison said. However, Dennison noted that "May data saw the gap between the two price indices widen, a sign that firms could be experiencing some margin loss."

Statistics Singapore recently reported that producer prices surged 27.5% year over year in April and 6.7% month over month. The spike was driven by fuel hikes triggered by the closure of the Strait of Hormuz amid the conflict in Iran.

On the production side, surging demand for AI-related technologies resulted in a 17.6% year-over-year jump in Singapore's manufacturing output in April, according to the Economic Development Board.

Meanwhile, the labor market showed signs of cooling. S&P Global reported that employment fell for the second straight month in May. This was in line with Ministry of Manpower data showing that first-quarter unemployment ticked up to 2.1% from 2.0% in the previous quarter.

Total employment grew by just 5,000 people in the first quarter, decelerating from the 17,700 jobs added in the fourth quarter of 2025.

Despite cost and labor headwinds, the 12-month outlook remains optimistic, with S&P Global noting that about 50% of companies forecast a rise in output.

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