OCBC SME Index holds at 50.5 in Q3 with gains in ICT and manufacturing

Looking ahead, OCBC expects conditions to ease as consumer sentiment remains cautious.

The OCBC SME Index remained in expansionary territory at 50.5 in the third quarter of 2025, unchanged from the previous quarter.

According to the latest report by OCBC, the overall reading reflected year-on-year increases in SME collections (+8.5%) and payments (+6.4%), with stronger activity in the Wholesale Trade, Information & Communications Technology (ICT), and Manufacturing sectors. In contrast, softness persisted in Food & Beverage (F&B) and Building & Construction.

The index’s GDP nowcast points to growth slightly above 3.5%, a moderation from 4.4% in the second quarter. This is broadly in line with the Ministry of Trade and Industry’s advance estimate of 2.9%.

Looking ahead, OCBC expects conditions to ease as consumer sentiment remains cautious and the pace of tourism growth levels off.

A sentiment poll conducted alongside the index found that 53% of SMEs expect conditions to remain the same or worsen over the next six months, whilst 47% are optimistic about improvements.

Domestic-facing SMEs were generally more downbeat. Wage bills rose 5.2% YoY amongst domestically focused firms, compared to 4.8% for externally oriented ones. Additionally, 44% of respondents reported being negatively impacted by US tariffs and are exploring alternative markets.

The ICT sector saw a return to expansion with an index reading of 51.0, ending a 12-quarter contraction streak. Collections rose 14.3% YoY, payments by 12.0%, and overseas collections surged 29.7%. Sub-sectors like ICT Manufacturing & Sales (50.8) and Data Processing & Software (50.6) provided support.

Manufacturing continued to expand at 50.9, driven by Precision Engineering (51.3). Electronics & Semiconductors (50.2) and Consumer Products (50.7) also contributed to the sector's performance.

Transport & Logistics saw a mild contraction at 49.9, reflecting softer maritime activity. Logistics (49.4), Sea Transport (49.9), and Land Transport (49.9) all hovered below the neutral threshold.

Healthcare posted marginal growth at 50.1, with Distributors at 50.2 and Providers at 49.6. Wage bills in the sector rose 8.3%.

Building & Construction remained slightly contractionary at 49.9, although the pipeline of projects continues to offer support. Sub-sectors such as Building Materials (49.3) and Investment Companies & Operators (49.4) lagged, whilst Construction itself held steady at 50.0.

Business Services also dipped to 49.9, weighed down by Consultancy (49.8) and Advertising & Exhibition (49.2). Accounting & Legal (50.5) was a rare bright spot. Wage growth in the sector was notably high at 12.6%.

The Education sector contracted to 49.9, led by Early Childhood (49.3) and Formal/Commercial Schools (49.2), though Training Centres (50.9) and Recreation Classes (50.5) showed expansion.

F&B recorded one of the weaker performances, with an overall reading of 49.4. F&B Services (49.0) and Retail (48.4) were under pressure, though F&B Wholesale Trade (50.7) managed modest growth. The sector also saw closures and reported modest wage growth at 1.0%.

Other sectors showed mixed results: Retail (50.9), Wholesale Trade (51.2), Resources (50.2), and Others (50.9) remained in expansionary territory.