share on
Total employment rose by 17,700 in Q4 2025 and unemployment stayed low at 2.8%, but growth is expected to ease in 2026 as firms turn cautious and inflation climbs to 1.5-2.5%.
Singapore’s labour market ended 2025 on stable footing, with demand and supply broadly in balance, according to the latest macroeconomic review by the Monetary Authority of Singapore (MAS).
Total employment expanded by 17,700 in the fourth quarter, lifting overall gains for the year above 2024 levels. Nearly half of the increase came from non-resident construction workers, reflecting stronger labour demand from public infrastructure and housing projects.
Excluding construction, employment growth remained broadly steady compared to a year earlier. MAS’ Labour Market Pressure Indicator, which tracks more than 20 variables, also pointed to strengthening conditions in the second half of 2025. Overall, labour demand and supply were broadly aligned by the end of the year.
Resident employment grew at a firmer pace compared to 2024, keeping the unemployment rate low at 2.8%. Growth was concentrated in domestic-oriented services and modern services sectors.
However, hiring trends diverged towards the end of the year. Recruitment in modern services eased in the fourth quarter following earlier gains, while hiring picked up in retail, food and beverage, and administrative and support services such as employment agencies. Retrenchments remained contained.
Hiring outlook to moderate in 2026
Looking ahead, MAS said firms are expected to take a more cautious approach to hiring amid growing global uncertainties.
Elaborating on this, the authority shared that according to survey data from the Singapore Commercial Credit Bureau (SCCB)’s Business Optimism Index, a slight moderation can be seen in business optimism for the second quarter of 2026, following the outbreak of conflict in the Middle East. With economic growth expected to slow, employment gains are projected to ease from 2025 levels.
Non-resident employment growth is likely to adjust alongside the broader slowdown. Resident employment should continue to be supported by hiring in domestic-oriented and modern services sectors.
At the same time, labour demand remains structurally strong in sectors such as healthcare, social services, public administration and education. Vacancies also persist in technology and engineering roles, reflecting demand for specialised skills.
Sectors more exposed to rising energy costs could pull back on hiring. Even so, labour market conditions are expected to remain broadly balanced as demographic trends moderate labour supply growth.
Apart from the above, nominal wage growth for residents is projected to moderate this year. Policy-driven wage adjustments, including higher baseline wages under the Progressive Wage Model and pre-announced pay increases for selected groups such as educators, are expected to provide some support.
The review also highlighted that a deeper or more prolonged slowdown could lead to a sharper pullback in hiring and an increase in retrenchments, which would widen labour market slack and further ease wage growth.
Inflation remains modest, but pressures are building
Inflation in the early months of 2026 remained relatively subdued.
MAS core inflation held steady at 1.2% year-on-year in January and February, unchanged from the previous quarter. Overall consumer price inflation edged up slightly to 1.3%.
The moderation was partly due to lower electricity and gas tariffs, as well as enhanced education subsidies that eased services inflation. Accommodation costs rose due to reduced rebates.
Underlying inflation remained moderate, supported by broadly benign business cost pressures. Imported costs for commodities such as oil and food continued to decline on a year-on-year basis up to February, while regional producer prices remained modest.
On the domestic front, productivity gains in services sectors helped keep unit labour cost growth below historical averages, limiting upward pressure on prices.
Some sectors were better able to pass on rising costs. Retail goods inflation picked up alongside stronger sales, while food services inflation remained muted as demand stayed largely unchanged.
Global energy shock expected to slow growth and raise inflation
MAS highlighted that recent conflict in the Middle East have disrupted global supplies of oil, gas and other key commodities, which will weigh on both global and domestic economic conditions.
- Global economy: Shipping through the Strait of Hormuz has been severely constrained since late February, disrupting the flow of oil and gas. This has led to a sharp increase in global commodity prices and is expected to push inflation higher worldwide. At the same time, global growth is likely to slow due to supply disruptions and weaker demand, with tighter financial conditions posing an additional risk.
- Singapore economy: Singapore’s growth outlook is expected to soften amid continued uncertainty over energy supplies. Higher input costs will weigh on energy-dependent industries first before gradually affecting the broader economy. While resilience in global AI-related investments could offer some support, overall GDP growth is projected to slow in 2026 from the strong 5.0% recorded in 2025, with the output gap averaging around zero.
- Inflation outlook: Inflation remained modest in early 2026, but pressures are building. Rising fuel prices and higher costs of imported goods and services are expected to feed through to consumer prices in the coming months. This will likely lead to increases across categories such as food, utilities, retail goods, and travel-related services. MAS now expects both core and headline inflation to average between 1.5% and 2.5% for the year.
- Key risk: The main risk to the outlook is a prolonged energy crisis. A more sustained disruption to global energy supplies could further raise inflation while weighing more heavily on growth. This could be compounded by tighter global financial conditions or weaker demand in key sectors such as technology.
MAS tightens policy slightly as inflation rises
Keeping overall conditions in mind, Singapore’s GDP growth is expected to slow this year, with the output gap averaging around zero percent.
Imported energy costs have already risen, while prices of a wider range of goods and services are set to increase in the coming quarters. As a result, core inflation is expected to pick up and remain elevated in the near term.
In response, MAS will slightly increase the rate of appreciation of the S$NEER policy band, with no change to its width or centre.
MAS said it remains in a position to respond to risks to medium-term price stability, and will continue to monitor developments closely while standing ready to curb excessive volatility in the exchange rate.
share on
