SME performance up in Q2 2024, but expert predicts a flat year

In Q2, the OCBC SME Index hit 50.2, ending five quarters of contraction.

Small and medium enterprises (SMEs) experienced improved health and performance in Q2 2024, as evidenced by the OCBC SME Index, which turned expansionary for the first time since Q4 2022.

In Q2 2024, the SME Index rose to 50.2 from 49.7 in Q1 2024. 

“SME collections across the board grew by 1.4% year-on-year while payments dropped by 1.3%,” OCBC reported.
OCBC credited the index's increase to improvements in seven of the 11 industries, highlighting that four had shifted from contraction to expansion.

The four industries were Trasport & Logistics (50.6), Resources (51.1), Wholesale Trade (50.4), and Healthcare (50.2).

Other industries which saw expansions were Education (50.8), F&B (50.6), and Retail (50.3).

On the other hand, Building & Construction (49.8), Business Services (49.8), Manufacturing (49.9), and ICT (49.5) remained contractionary in Q2 2024.

“The OCBC SME Index is likely to remain relatively flat and range-bound for the rest of 2024 despite the improvements registered this quarter as the uncertainties in the macroeconomic environment persist,” OCBC said.

“The externally oriented industries will likely benefit from the turnaround in global electronics, with potential improvements in broader manufacturing and wholesale trade. However, downside risks persist given the continued disruptions to the global supply chain and higher costs, particularly in sea transport. Further geopolitical tensions could also disrupt the disinflationary momentum, depressing domestic demand,” OCBC added.