Business Costs of Singapore's Manufacturing and Services Sectors

Business costs in the manufacturing and services sectors have increased after a period of decline during the global financial crisis (Exhibit 1). Between the third quarter of 2009 and the first quarter of 2013, the unit business cost (UBC) index for the manufacturing sector rose by 19 per cent cumulatively, while the unit services cost (USC) index for the services sector rose by a higher 25 per cent. However, the pace of increase in business costs has moderated in recent quarters. For the whole of 2013, the UBC index rose by 1.5 per cent, slower than the 3.5 per cent increase in the previous year. Similarly, the increase in the USC index eased from 3.1 per cent in 2012 to 2.1 per cent in 2013.

Labour, utilities and trade & transport costs make up the bulk of business costs in the manufacturing sector

In the manufacturing sector, labour cost takes up the largest share of total business costs, followed by utilities and trade & transport costs (Annex A, Exhibit A1). Collectively, these three cost components account for 78 per cent and 85 per cent of the total business costs of small-and-medium enterprises (SMEs) and large enterprises in the sector respectively. Other services cost components, including rentals, and government rates & fees account for only a small proportion of business costs for both SMEs and large enterprises in the sector. (See details of the cost structures of SMEs and large enterprises at the overall level, as well as in the various manufacturing clusters in Annex A.)

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