SME expansion holds at 51.9 as outward sectors pull ahead

Manufacturing posted its sixth straight quarter of expansion at a reading of 52.4.

The OCBC SME Index remained in expansion at 51.9 in the third quarter (Q3) of 2026, up from 51.3 in the second quarter, supported by continued momentum in outward-oriented industries.

Small and medium-sized enterprises (SMEs) payments grew 19.3% and collections 18.6% from a year earlier despite rapidly changing business conditions, according to the latest OCBC SME Index.

The information and communications technology (ICT) sector grew to 52.5, reversing the slight moderation seen in the previous quarter.

Amongst its segments, ICT manufacturing and sales (53.0) led the expansion.

Manufacturing extended its upward trajectory and registered its sixth straight quarter of expansion, with a reading of 52.4 due to strong performances in precision engineering (52.9) and electronics and semiconductors (52.5).

Transport and logistics also increased 0.3 points to a reading of 51.8, supported by expansions in logistics (52.0) and sea transport (51.7).

Meanwhile, growth across domestically oriented sectors was more measured and varied.

Retail (52.7), building and construction (51.1), food and beverage (50.6), and healthcare (50.3) remained in expansion, whilst business services (50.6) returned to growth after contracting to 49.7 in Q2.

Education slipped further into contraction at 49.0, weighed down by weaknesses within training centres (48.5) and formal education and commercial schools (49.3).

OCBC said the rise in transaction values may partly reflect higher prices as cost pressures remain elevated across energy, logistics, electricity, and manpower.

Looking ahead, the bank said SME performance may diverge further, citing rising manpower costs, competition for skilled workers, wage pressures, and geopolitical risks as key challenges.

Meanwhile, technology adoption could become a key differentiator.

“SMEs that successfully invest in productivity may therefore be better positioned to manage cost pressures and pursue further growth,” it added.

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