Singapore’s small and medium-sized enterprises ( SMEs ) are showing signs of renewed resilience despite a challenging macroeconomic and geopolitical backdrop. The OCBC SME Index rose to 50.5 in the second quarter of 2025, up from 49.9 in the previous quarter, signalling a return to expansionary territory.

The OCBC SME Index, launched in 2021, tracks business health using transactional data from over 100,000 Singapore-based SMEs with annual sales turnover of up to S$30 million ( US$23.3 million ).

A score of 50 signals no change from a year ago; above 50 indicates an improvement, while below 50 reflects a decline. It offers a real-time gauge of SME performance across industries.

Driven by both domestic-facing and externally oriented sectors, the index shows a broad-based recovery across industries. Year-on-year, total collections increased by 5.8% while payments rose 4.5%, underscoring improving business activity.

Externally, wholesale trade, manufacturing, and resources posted modest growth. Manufacturing surprised to the upside, buoyed by strong consumer product sales ( 51.3 ), even as precision engineering and electronics ( both at 49.9 ) lagged, weighed down by global demand slowdowns. Transport and logistics remained in contraction at 49.8, though logistics services bucked the trend with a 50.8 reading.

Domestically, sectors such as food and beverage ( 50.6 ), business services ( 50.5 ), building and construction ( 50.3 ), and healthcare ( 50.3 ) entered or returned to growth territory. Notably, the F&B sector rebounded sharply, reversing the previous quarter’s dip, helped by strong wholesale activity. However, ICT ( 49.3 ), education ( 49.7 ), and parts of transport continued to contract.

Tariff headwinds

Despite the uptick, SME sentiment remains cautious. According to OCBC’s SME Business Outlook poll, 57% of SME owners expect conditions to worsen or remain unchanged in the second half of 2025, with only 43% anticipating improvement, down 8 percentage points from the previous quarter. The looming August 1 deadline for US tariff decisions continues to cast a long shadow over business planning.

Roughly half of surveyed SMEs cited negative impacts from the tariff situation, across both export-driven and domestic sectors. Additionally, 31% reported concerns over exchange rate and interest rate volatility, and 28% flagged ongoing supply chain disruptions as key operational risks.

“SMEs turned in a resilient performance in 2Q2025, holding up surprisingly well against challenging economic conditions with broad-based improvements across both external and domestic industries,” says Linus Goh OCBC head of global commercial banking.

“Going forward, US tariffs and the expected disruption to global trade remain very much top-of-mind concerns for SMEs, and we expect the OCBC SME Index to ease in the second half of 2025.”