Business confidence in Singapore's manufacturing sector remained positive in the second quarter of 2026, with a net weighted balance of 12%, though down from 17% in the previous survey, as strong global AI-related demand continued to support sentiment despite elevated geopolitical and economic uncertainty. Precision engineering (+55) was the most optimistic, driven by semiconductor-related equipment demand, while electronics (+19) also stayed upbeat on robust AI-related semiconductor demand. In contrast, chemicals (-25) remained the weakest amid Middle East-related feedstock supply disruptions, while general manufacturing industries (-13) stayed cautious due to rising material, fuel, and freight costs. Looking ahead, a net 26% of firms expect output to increase in the third quarter, led by precision engineering, electronics, and transport engineering, while most manufacturers anticipate stable employment.