In a business expectation survey, 29 percent of industrialists expected conditions to deteriorate over the next six months, while just 10 percent saw an improvement, the Economic Development Board (EDB) said.

Electronics, which account for 55 percent of Singapore's exports, is expected to be the hardest hit by the US-led economic retreat.

"Within the manufacturing sector, the electronics cluster's business outlook is by far the least favorable," the EDB said.

The semiconductor, contract manufacturing and data storage industries all forecast slack demand.

The manufacturing sector, which accounts for 25 percent of total economic output in the island-state, gets half its production from electronics.

In the chemical industry, manufacturers were "mildly pessimistic" while engineering was saved by strong orders in the marine and aviation industries.

With the exception of the hotel industry, all areas of the commerce sector anticipate "conditions to be unfavourable."

Only the services sector was positive with a net 14 percent of firms expecting business to pick up in the six months ending September, with the sentiment stronger among transport, real estate and financial firms than in information technology and engineering.

The business expectations survey was released as union leaders told a May Day rally that more than 9000 workers have either lost their jobs or been put on a shorter working week in Singapore since the start of the year.

Deputy Prime Minister Lee Hsien Loong told the same rally that more retrenchments were expected.

"Singapore cannot escape this," he said, adding that beyond the current slowdown there were longer term worries.

"One key challenge is competition from countries in the region, where people are hungry for development and growth," he said.

In his May Day speech, Lee urged Singaporeans not to lose the determination that transformed the former tropical backwater into one of Asia's wealthiest economies.

"It was hard work and grit, the determination to press on when things were tough, that got us here. We cannot afford to lose this drive," he said.

"Younger Singaporeans must keep up this drive, and work as hard as the previous generation."