July unemployment rate remained at 3.4% for the second consecutive month while hiring pace increased by 19.2K from 10.6K in June. The number of unemployed in July fell 0.1% y/y to 518.6K while those employed continued its upward trend to 14.9mil. Meanwhile, the labour force participation rate (LFPR) improved to 68.6% in July, the highest since October 2013 partly supported by a drop in the number of people outside of labour force which fell by 1.5% y/y to 7.04mil.

Overall health of the labour market is poised to stay firm, supported by the current economic condition which we project growth to grow by 5.0% y/y in 2018. Job opportunities will be supported by domestic activities and exports with some aid from the “informal” sector. Thus the headline unemployment rate should be around 3.2% – 3.3% in 2018. But the challenge remains on youth unemployment rate which is at 10.8% in 2017 behind Indonesia at 15.6% and China at 10.8% but higher than Singapore (4.6%), Thailand (5.9%), Vietnam (7.0%), the Philippines (7.9%) and India (10.5%). The still high youth unemployment is due to mismatch of skills and underlying structural gaps between the education system and industry.

• July unemployment rate remained at 3.4% for the second consecutive month while hiring pace increased by 19.2K compared to 10.6K in June. YTD the economy added 242.3K jobs which is significantly higher when compared to the same period in 2017 which stood at 130.6K. The number of unemployed in July fell 0.1% y/y to 518.6K while those employed continued its upward trend to 14.9mil.

• The health of labour market was further reflected by the labour force participation rate (LFPR) which improved to 68.6% in July from 68.5% in June. It turned out to be the highest since October 2013. It was partly supported by a drop in the number of people outside of labour force which fell by 1.5% y/y to 7.04mil.

• Overall health of the labour market is poised to stay firm, supported by the current economic condition which we project growth to grow by 5.0% y/y in 2018. Overall economic activities will come from domestic supported by investment through capacity expansion, steady growth in manufacturing activities, and exports from a sustainable global growth. Besides, contribution from the “informal” sector although appears to be small is also poised to support the overall labour market. On that note, the unemployment rate should be around 3.2% – 3.3% in 2018.

• Although headline unemployment remains in a healthy region, of concern is the youth unemployment. Based on 2017 data, although our headline unemployment was reported at 3.4%, the youth unemployment rate stood over three times higher at 10.8% in 2017, falling behind Indonesia at 15.6% and China at 10.8% but higher than Singapore (4.6%), Thailand (5.9%), Vietnam (7.0%), the Philippines (7.9%) and India (10.5%). The still high youth unemployment is due to mismatch of skills and underlying structural gaps between the education system and industry.

Source: AmInvest Research - 18 Sept 2018