Hiring intentions 'quietly dry up' as Hormuz closure hits Singapore SMEs

Employment growth slows to 5,000 in Q1 as firms pull back on hiring.

Singapore's labour market is softening in ways that may not yet show up in the numbers, and analysts say that lag is exactly what businesses should be watching.

“A job market where openings quietly dry up tends to weigh on consumer confidence before it registers in any hard unemployment print. That lag is worth keeping in mind as second-quarter data starts coming in. Whether this stabilises or deepens depends almost entirely on how long the Hormuz situation drags on,” Zavier Wong, market analyst at eToro, said in an analysis.

According to the Ministry of Manpower, Singapore’s labour market expansion slowed in the first quarter (Q1) of 2026 as hiring and wage expectations fell. Total employment increased by 5,000 in Q1 2026, up from 2,300 a year earlier but down from 17,700 in the fourth quarter (Q4) of 2025.

Meanwhile, the share of firms expecting to hire in the next three months fell from 54.6% in February 2026 to 44.6% in March 2026. The share of firms expecting to raise wages declined from 39.3% to 25.4% over the same period.

A Singapore Business Federation (SBF) survey also found that two in three Singapore businesses have been moderately to severely affected by the ongoing Middle East conflict, as rising energy and logistics costs affect operations and demand.

The poll highlighted the struggle small businesses are facing when it comes to managing the impact of the conflict.

For instance, 78% of large firms expressed confidence in managing ongoing volatility, but only 36% of small and medium enterprises (SME) felt the same. Furthermore, 54% of all businesses remain very or extremely concerned about their long-term viability if current conditions persist beyond the next six months.

“Our latest poll shows a growing confidence gap between SMEs and larger firms. Whilst bigger companies are better able to manage rising costs, SMEs are feeling the strain more acutely amid ongoing energy and logistics volatility,” SBF CEO Kok Ping Soon said.

“Businesses are tightening costs and managing risks through supply chain diversification and currency hedging. Businesses welcomed the higher CIT rebate but are also calling for working capital support and help with logistics cost,” he added.

To adapt to the current situation, 40% of SMEs said they are prioritising cash conservation. Large firms, meanwhile, are undertaking sophisticated risk management, including fuel and FX hedging and accelerating investments in energy efficiency.

“It’s clear that SMEs are bearing the brunt, which makes sense. SMEs are less able to hedge, less able to absorb, and more directly exposed to energy and logistics costs that have risen sharply since the Strait of Hormuz was effectively closed in late February,” Wong said.

“For investors, the more immediate read is on domestic-facing sectors. Retail, F&B, and hospitality are where margin compression hits first, and the Singapore National Employers Federation (SNEF) data suggests those sectors have already been flagging rising labour costs on top of energy bills,” he added.