Manufacturing sentiment improves as electronics, aerospace boost outlook

The electronics cluster is the most optimistic.

Singapore’s manufacturing sector has turned cautiously optimistic for the next six months ending March 2026, according to the Economic Development Board’s quarterly survey.

A net weighted balance of 8% of firms expect business conditions to improve between October 2025 and March 2026, driven mainly by strong semiconductor demand and robust aerospace maintenance activity.

The electronics cluster led the recovery with a net weighted balance of 30% of firms projecting improved business conditions, reflecting sustained AI-related demand for semiconductors, whilst the aerospace segment in transport engineering posted an increase of 25% amidst steady aircraft maintenance demand.

Biomedical manufacturing also registered optimism (11%), contrasting with weaker outlooks in precision engineering (–35%) and chemicals (–4%).

Most firms (62%) still expect the operating environment to remain broadly unchanged, underscoring that the recovery remains uneven and exposed to tariff risks and overseas competition.

Manufacturers expect higher output

A net weighted balance of 7% of manufacturers expect higher output in the fourth quarter of 2025 compared to the third quarter of 2025.

Going by cluster, all except the biomedical manufacturing and chemicals clusters are projecting an increase in production.

A net weighted balance of 30% of firms in the electronics cluster forecast a higher production level in Q4 2025 compared to a quarter ago. This positive outlook is driven primarily by the semiconductors segment, which is projecting strong output to meet sustained demand from AI-related markets. On the other hand, the other segments are projecting similar or lower production.

In the transport engineering cluster, a net weighted balance of 14% of firms expect a higher level of activity in the fourth quarter of 2025 compared to the third quarter of 2025. The aerospace segment continues to project increased aircraft engine repair work.

However, the marine & offshore engineering and land segments project lower output, amid continued headwinds to the global economy.

A net weighted balance of 5% of firms in the precision engineering cluster project a rise in output in the December quarter. The precision modules & components segment is forecasting higher output of optical products and bonding wires, whilst the majority of the machinery & systems firms foresee output to remain broadly unchanged from the previous quarter.

On the other hand, a net weighted balance of 8% of firms in the biomedical manufacturing cluster is projecting a lower level of production in Q4. This is largely attributed to the pharmaceuticals segment forecasting reduced production of active pharmaceutical ingredients on the back of a different product mix.