Missing the mark: Singapore's services sectors suffer skyrocketing costs, weak gains

External demand was also poor.

In 2014, Singapore’s services-producing industries grew 3.2%, about half of the 6.1% growth rate in 2013. Part of the reason for slower growth was domestic, as the tight labour market continued to increase business costs, while weak gains in labour productivity, if any, continued to hamper firms’ margins.

2014 also saw slower growth in services exports (3.6%, compared to 8.0% in 2013) due to weak external demand, particularly in the second half of the year, from concerns of falling commodities prices amid a global slowdown that was led by Japan and the Euro area.

Although the manufacturing sector grew 2.6% in 2014, stronger than the 1.7% growth rate in 2013, it was mainly due to the strong growth in 1Q 2014. In the subsequent quarters, the sector faltered due to poor external demand as well as domestic labour supply constraints.

Growth in the construction sector also slowed to 3.0% in 2014, from 6.3% in 2013, as private sector construction activities remained weak.