The success of the sector also helped shore up the combined sales of Singapore's 1,000 biggest firms, according to a new report.
But this did not prevent profit margins from being squeezed across the board.
The annual report, released yesterday by DP Information Group, was based on more than 70,000 audited financial statements for the year ended May 31, last year.
Despite the tighter rules on manpower, the survey found that the labour-intensive services sector recorded a 27.5 per cent jump in turnover to $83.1 billion last year.
Earnings were also up by 62.6 per cent to $11.5 billion last year, more than double the profits from firms in other sectors, it found.
This was mainly because the number of service firms that made the honour roll increased from 48 to 56 over the year.
Health-care and medical companies were the best performers, bolstering the overall performance of the services sector.
Turnover of health-care firms came in at $21.2 billion, up 37.7 per cent from a year earlier, while earnings soared 129 per cent to $1.1 billion year-on-year.
Ms Chan Yew Nah, managing director of DP Information Group, said that Singapore's growing silver population and the region's rising affluence have supported the growth of health and medical services.
However, health-care provider Parkway Pantai which emerged as one of the top performing firms, said it is seeing more regional players competing for medical tourists.
"This is not necessarily a bad thing, if it means that the level and quality of health care in Singapore is raised as a result," said Dr Tan See Leng, group chief executive and managing director of Parkway Pantai.
The combined revenue of Singapore's largest 1,000 firms hit a record of $2.75 trillion last year, up 13.9 per cent.
But while sales were booming, the firms' total earnings rose by a paltry 2.1 per cent to $149.8 billion last year - slightly down from a 2.2 per cent increase in the same period a year earlier.
Of the 11 industries surveyed, eight recorded a fall in combined earnings. As a result, the overall profit margins of the 1,000 companies surveyed fell from 5.78 per cent to 5.09 per cent.
"Singapore's largest companies are feeling the same cost pressures as smaller firms, with increases in rents and manpower biting into the bottom line," noted Ms Chan.
The finance sector came in second, with earnings rising 30 per cent to $23.9 billion last year.
The information and communications technology (ICT) sector emerged as one of the worst performers, with net profits slumping 36.4 per cent year on year.
Mr Simon Lee, chief executive of Thatz International, an IT outsourcing and consulting firm, said that though the demand for IT services is strong, the increasing competition from foreign players is making it tougher to compete.
"ICT firms with complementary skills should come together to compete with the big boys to beat the competition," he said.