Over the five-year period of 2012 to 2017, the unit business cost index for the manufacturing sector (UBCI) rose by 1.1 per cent per annum on a compound annual growth rate (CAGR) basis, while that for the services sector (UBC-Services Index) fell marginally, by 0.1 per cent per annum.

Within the period, the manufacturing UBCI saw a general downward trend between 2013 and 2016, before rising by 3.4 per cent in 2017. Similarly for the overall services sector, the UBC-Services Index declined between 2014 and 2016, before posting an increase of 1.3 per cent in the first three quarters of 2017 as compared to the same period a year ago.

The rest of the article is organised as follows. We first examine the business cost structure of the manufacturing and services sectors, before discussing the factors contributing to the manufacturing UBCI and UBC-Services Index trends in the last five years. We then end with a discussion on recent trends in labour, rental and utilities costs, as well as the outlook for these cost components.

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