Though April’s unemployment rate remained unchanged for the second straight month in April at 3.4% with the labour force participation rate (LFPR) staying steady at 68.5% for three consecutive months, we found the total number of unemployed people rose from to 523.3K in April 2019 from 514.2K in December 2018, a net increase of 9.1K. A point to note is that a total of 31.5% or 7.18mil of the working age population (15–64 years) were outside the labour force in April and this is on a rising trend.

A quick assessment showed that for every 1% change in the GDP, its impact on net job employed is around 0.58% of 1 percentage point (ppt) in net job creation. Should 2019 GDP growth run 1ppt slower, the economy will fail to add 78K–88K net new jobs to the labour market, translating to an increase in the unemployment rate of between 0.5–0.7ppt in 2019. Our biggest worry is youth unemployment. In 2018, youth unemployment rose to 11.2% from 10.8% in 2017, mainly due to the mismatch between the skills required for jobs and the level of skills young people have when they leave school. This mismatch trend risks rising if not addressed quickly.

• Unemployment rate remained unchanged for the second straight month in April at 3.4%. Meanwhile, the labour force participation rate (LFPR) remained steady at 68.5% in April for three consecutive months. Though the unemployment rate remained unchanged, the total number of unemployed people has been on a rising trend, climbing to 523.3K in April 2019 from 514.2K in December 2018, implying a net increase of 9.1K.

• The rising number of unemployed people remains high, given the slower economic growth. A point to note is that a total of 31.5% or 7.18mil of the working age population (15–64 years) were outside the labour force in April and these included housewives, students, retirees and those inactively looking for job, compared with 7.17mil in March. It is on a rising trend.

• A quick assessment showed that for every 1% change in the economic growth, its impact of net job employed is around 0.58% of 1 percentage point (ppt) in net job creation. It implies that if 2019 economic growth runs 1ppt slower, the economy will fail to add 78K–88K net new jobs in the labour market. It should see the unemployment rate increase by between 0.5– 0.7ppt in 2019.

• Based on our quick assessment, the unemployment rate should hover around 3.8% to 3.9% in 2019 from 3.3% in 2018. And if GDP were to slow down by 2ppts in 2019, our unemployment rate should rise to 4.2% to 4.4% in 2019. Nonetheless, our base case unemployment forecast remains at 3.5% for 2019. Our biggest worry is on youth unemployment. In 2018, youth unemployment rose to 11.2% from 10.8% in 2017, mainly due to the mismatch between the skills required for jobs and the level of skills young people have when they leave school. The mismatch trend risks rising if not addressed quickly.

Source: AmInvest Research - 17 Jun 2019