SMEs feel the pinch of rising costs, global uncertainty
Singapore businesses are maintaining a cautious approach to hiring as cost pressures mount and economic uncertainty weighs on confidence, according to new survey data from the Singapore Business Federation (SBF).
The SBF's National Business Survey 2026 – Q1 Business Sentiments Edition found that the hiring outlook edged down by 1.4 points to 55.1 in Q1 2026, indicating that businesses generally intend to maintain current workforce levels over the next six months, with limited plans for expanding headcount.
The subdued hiring sentiment forms part of a broader pullback in business confidence. The Business Sentiment Index (BSI) fell by 2.1 points to 51.3 in Q1 2026, reversing the improvement recorded in Q4 2025, as cost pressures intensified and profitability expectations weakened.
Cost expectations recorded the largest increase among all BSI sub-components, rising from 71.0 in Q4 2025 to 75.9 in Q1 2026, driven by expectations of continued global energy and logistics disruptions.
Those pressures are feeding directly into workforce decisions, with employers reluctant to take on additional headcount amid uncertainty over their cost base and earnings outlook, according to the report.
Hiring sentiment by company size
Small and medium-sized enterprises (SMEs) are bearing the brunt of the downturn in sentiment. Softer hiring sentiment was more evident among SMEs, while large companies reported an improvement in hiring confidence following declines over the previous two quarters.
The difference reflects a wider gap in how larger and smaller firms are weathering the current environment. Some 43% of SMEs anticipated worsening business conditions in Q1 2026, up sharply from 30% in the previous quarter, while large companies demonstrated greater resilience with sentiment remaining broadly stable.
At the sector level, the picture is similarly uneven. The Hotels, Restaurants & Accommodation, Administrative & Support Service Activities, Health & Social Services, and Logistics & Transportation sectors demonstrated relatively stronger hiring intentions.
"In contrast, the Real Estate Activities, Wholesale Trade, Retail Trade, and Manufacturing sectors were more subdued in their hiring outlook," the report read.
The muted hiring stance aligns with a softening in operational capacity. Operational Capacity Utilisation declined slightly by 1.1 points to 56.8 in Q1 2026, in line with the softer hiring and growth outlook.
Despite the caution, the survey pointed to some stabilising factors. Confidence in access to financing remained relatively steady at 53.8, while sentiment towards government support held broadly stable at 55.9.
The SBF conducts the National Business Survey to understand the needs, concerns, and priorities of businesses in Singapore, with findings used to inform the federation's advocacy efforts and engagement with the government.
