Even as consumers descend on malls with Christmas gift lists in hand, small and medium enterprises (SMEs), too, have gone shopping.

A new study has revealed that SMEs in Singapore are expecting to spend more on new technology and assets to improve productivity and combat rising business costs.

In particular, construction-engineering firms will be the most active in investing in solutions to mitigate the impact of the Republic's foreign worker policies. The sector is among the hardest hit by tighter manpower quotas, higher levies and a reduction in the number of employment passes.

According to the Singapore Business Federation-DP Information Group SME Index, the capital investment index score for these firms was the highest at 5.61, compared to an overall score of 5.45. Sub-group indices are assigned a scale of one to 10; a score above five indicates positive sentiment.

The overall capital investment index has been on an upward trajectory since reaching a bottom of 5.03 in forecasts for the second and third quarters of this year.

DP Info managing director Chen Yew Nah said that this shows that SMEs are embracing the drive to increase productivity.

"SMEs know they need to increase their productivity to stay competitive. That's why they are buying machinery, IT hardware and software.

"These investments have the added benefit of driving down costs over time. Investing in better equipment and automation is a sound strategy to combat rising manpower costs."

SBF CEO Ho Meng Kit said that this is also partly due to the improved macroeconomic outlook.

He added: "2013 has seen a gradual stabilisation in the global economy, as major downside risks emanating from Asia, US and eurozone subside. Accordingly, Singapore has also benefited from this global improvement, as evident in higher revised economic growth for 2013."

The index is based on 3,000 interviews with SME owners and managers, and tracks their sentiments for October this year to March next year.

Overall outlook for the period picked up very slightly, from 54.1 in the last survey to 54.7. This, however, is better than the 53 score last year. A score above 50 is considered positive.

The capital investment plans by the construction sector show a more optimistic outlook.

Construction SMEs registered the largest improvement in their profitability expectations, with a score of 5.41, after reaching a low of 4.98 in the last survey.

This could be due to SMEs learning and adapting to higher business costs, as well as the prospect of upcoming public projects, the report said.

Overall profitability expectations increased from 5.21 in the last survey to 5.39, though it remains largely unchanged from a year ago.

Firms in the manufacturing and transport/storage sectors, however, are expecting lower profitability compared to the previous quarter. The score for manufacturing dipped from 5.33 to 5.32, while transport/storage's figure dropped from 5.31 to 5.22.

Overall turnover expectations rose to 5.6, compared with 5.42 in the last quarter and 5.46 a year ago.