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 the key components of business costs in 2024.

(I) Unit Business Cost in the Manufacturing and Services Sectors

In 2023, unit business cost in the manufacturing sector rose, while unit business cost in the overall services sector declined

In 2023, the unit business cost index for the manufacturing sector (UBCI) rose by 8.5 per cent, easing from the 9.9 per cent increase in 2022 (Exhibit 1). The main contributors to the increase in the UBCI were the “others” cost component, manufacturing unit labour cost (ULC) and the costs of work given out. Collectively, they accounted for 9.6 percentage-points (pp) of the increase in the UBCI, more than offsetting the declines in royalty payments and utilities cost (-1.3pp contribution). Meanwhile, the remaining cost components such as non-labour production taxes (e.g., property, road and other indirect taxes) and rental costs had a relatively small impact on the UBCI, in part due to their small shares in overall business costs. (Please refer to the Annex for the business cost structure of firms in the manufacturing and services sectors.)

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