This box article highlights the latest trends in business costs for firms in Singapore’s manufacturing and services sectors, as well as the outlook for key components of business costs in 2021.
(I) Unit Business Cost in the Manufacturing and Services Sectors
Unit business costs in both the manufacturing and overall services sectors declined in 2020
In 2020, the unit business cost index for the manufacturing sector (UBCI) fell by 14.4 per cent (Exhibit 1). The main contributors to the decline were manufacturing unit labour cost (ULC), utilities cost and royalties cost, with their contributions collectively accounting for 10.8 percentage-points (pp) of the fall in the UBCI. Meanwhile, cost components like rentals and non-labour production taxes3 (e.g., property, road and other indirect taxes) had a relatively small impact on the UBCI, in part because of their low shares of total business costs. (Please refer to Annex A for the business cost structure of firms in the manufacturing and services sectors.)
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