Manpower, rent and weak demand drag businesses’ profits

Singapore firms face profit decline due to rising manpower, rent costs, and weak demand. Only 4% of firms reported higher profitability, while 34% saw a decline. The Business Sentiment Index fell to 48.5, indicating subdued margin expectations for 2026. Cost pressures, demand uncertainty, and higher rental costs are key challenges. Sectors like hotels and retail have low profitability expectations, while banking and real estate are more optimistic. SMEs are more pessimistic than large firms. Companies are adopting cost-saving measures, price adjustments, and inventory management to cope.