Consumer-facing industries are emerging as the main source of optimism within Singapore’s services sector as businesses head into 2026, according to the latest Business Expectations Survey by the Singapore Department of Statistics.
While overall sentiment remains cautious, stronger expectations in retail and personal services are helping to support confidence amid global economic uncertainty.
For the period from January to June 2026, firms across the services sector reported a net positive business outlook with more companies expecting conditions to improve than deteriorate.
This optimism, however, is unevenly distributed. The survey shows that sectors closely linked to domestic consumption and essential services are outperforming trade- and transport-related industries.
Retail Trade Sees Festive-Led Upswing
The Retail Trade industry stands out as one of the most optimistic segments in the survey. Businesses in the sector expect stronger activity in the first half of 2026, supported by festive-related demand, particularly around the Chinese New Year period.
Supermarkets, in particular, are among the more upbeat. Retail firms also anticipate higher operating revenue in the first quarter of 2026 aligning with the traditional boost in consumption during festive periods.
The retail sector’s positive sentiment suggests that household consumption remains resilient, even as consumers navigate higher living costs and a more uncertain global environment.
Spending patterns may be more selective, but demand for essential goods and seasonal purchases continues to provide a reliable revenue base for retailers.
Personal and Community Services Show Sustained Demand
The Recreation, Community & Personal Services industry is another key contributor to positive business sentiment.
Firms in this sector expect stable to improving conditions in the coming months, driven largely by healthcare and childcare services.
Healthcare providers anticipate continued demand as Singapore’s population ages and healthcare needs become more complex. Childcare operators, meanwhile, expect enrolment levels to remain strong, supported by workforce participation trends and the ongoing need for dual-income households to access care services.
These sub-sectors also project higher operating revenue in the first quarter of 2026, alongside increased hiring.
The expectation of workforce expansion reflects not just short-term demand, but structural trends that are likely to support growth over a longer horizon.
Domestic Consumption as a Growth Buffer
The stronger performance of consumer-facing sectors underscores the importance of domestic demand in cushioning Singapore’s economy against external pressures.
While global trade, logistics, and shipping remain exposed to geopolitical risks and slowing international growth, sectors driven by local consumption are less directly affected by these factors.
This dynamic is particularly evident when comparing retail and personal services with Transportation & Storage, which remains one of the more cautious industries in the survey.
Firms in the water transport segment expect challenging conditions due to vessel oversupply, weaker cargo demand, and lower freight rates. These headwinds contrast sharply with the more stable outlook seen in domestically oriented services.
The divergence suggests that Singapore’s economic resilience in early 2026 is increasingly supported by internal demand rather than external trade flows. While this does not eliminate exposure to global risks, it provides a degree of insulation that helps maintain business confidence.
Employment Expectations Reflect Sector Strength
Employment forecasts further reinforce the role of consumer-facing industries as growth drivers. Across the services sector, firms expect hiring activity to increase in the first quarter of 2026, with retail and personal services among the key contributors.
Retailers are preparing for near-term demand linked to festive spending, while healthcare and childcare providers are expanding capacity to meet ongoing service needs.
These hiring plans indicate that businesses are not only responding to immediate demand but are also positioning themselves for sustained activity.
In contrast, sectors facing weaker revenue expectations, such as transportation and food & beverage services, show more subdued employment outlooks. For food and beverage businesses, sentiment has softened following the year-end holiday period, as demand normalises and cost pressures persist.
A Measured, Not Exuberant, Recovery
Despite the positive signals from consumer-facing industries, the survey does not point to an across-the-board acceleration in growth. Most firms still expect business conditions to remain broadly stable rather than significantly improve, reflecting a measured approach to expansion.
This cautious stance suggests that businesses are prioritising cost control and operational efficiency while taking advantage of pockets of demand where they exist.
For retailers and personal service providers, this means focusing on core offerings, essential services, and peak demand periods rather than aggressive expansion.
The broader implication is that Singapore’s services sector is entering 2026 on steady footing, supported by reliable domestic demand but mindful of global uncertainties that could affect sentiment and investment decisions.
Outlook for the First Half of 2026
Looking ahead, the performance of consumer-facing sectors will likely remain a key determinant of overall services sector momentum. As long as household consumption and demand for essential services remain stable, these industries are expected to continue providing support to revenue and employment growth.
However, the sustainability of this trend will depend on broader economic conditions, including inflation trends, labour market stability, and consumer confidence. Any significant deterioration in these areas could weigh on discretionary spending, even as essential services remain resilient.
For now, the latest survey suggests that Singapore’s services sector is navigating an uneven recovery, with consumer-facing industries playing a central role in maintaining confidence as the economy heads into 2026.
Shahriena Shukri is a journalist covering business and economic news in Malaysia, providing insights on market trends, corporate developments, and financial policies. More about Shahriena Shukri
