Manufacturers upbeat as AI drives demand

Caption language: en · Fetched: 2026-11-03

In business, business optimism among Singapore manufacturers has strengthened driven by sustained global demand for AI related products. A government survey found that nearly 3 in 10 expect business conditions to improve over the next 6 months while just 5% foresee a drop. The optimism is strongest in precision engineering and electronics supported by demand for AI related equipment and semiconductors. But chemicals manufacturers are the most pessimistic, particularly petroleum firms facing uncertainty over crude oil supplies. The Singapore Manufacturing Federation says businesses are also strengthening their supply chains to guard against disruptions. >> Manufacturing today is really highly interconnected. So sometimes all it takes is one critical component arriving late to disrupt the entire production line.

That's why companies are looking really at various alternatives, suppliers and also keeping essential inventories and making sure their operations are more flexible. >> Optimism is also growing in the services sector with all industries expecting more favorable conditions over the next 6 months. 21% of firms foresee an improvement compared with 6% expecting weaker conditions. Wholesale traders expect strong demand for AI related products. Retailers also anticipate stronger spending during the Christmas and Chinese New Year festive periods. But analysts caution that stronger business sentiment may not translate into equally strong hiring. >> Some sectors are doing very well and others are shrinking.

So if the outperforming sectors suddenly see an abrupt correction such as let's say AI suddenly crashing or the electronics sector demand suddenly grinding to a halt that may cause the current momentum to be arrested. >> Growth driven by the AI boom has been more capital inensive relying on automation and machinery rather than labor intensive on workers. firms are adopting a prudent and cautious approach amid frequent unexpected shocks and rising cost parishes even as they continue to seek and be optimistic about the opportunities out there. >> Analysts say geopolitical uncertainties and cost pressures will continue to weigh on the business outlook.