July’s unemployment rate inched up marginally to 3.5% while the labour force participation rate fell slightly to 67.7%. The slight gain in unemployment rate in July was driven by two factors i.e. (1) a net drop of 22.5K in the number of jobs created, the first drop during the year; (2) a surge of 11.3K in net unemployed; and (3) an increasing number of population outside the labour force, suggesting a growing number of students and those venturing into informal micro businesses.

We expect the unemployment rate to stay around 3.3% – 3.4% by end-2017 from 3.5% in 2016. The better-thanexpected GDP growth projected for 2017 at 5.7% – 5.9% should still keep the net jobs created position on a positive trajectory. The healthy 1H2017 GDP of 5.8% saw the net number of placed registrants standing at 1,644K versus a net placement of -861K in 1H2016 and -1,108K for the full year of 2016.

• The unemployment rate inched up slightly in the month of July. The July’s unemployment rate rose slightly to 3.5% after staying at 3.4% for four consecutive months. At the same time, we found the labour force participation rate, which is the ratio of labour force to the working population (15-64 years old), fell marginally to 67.7% in July from 67.8% in June.

• The slight gain in the unemployment rate was driven by three factors. First, we found a net drop in the number of jobs created in July, which is the first net decline for the year. Net jobs created fell 22.5K in July following a net gain of 65.5k in June. Despite the decline, total net jobs created for the first seven months of the year stood at 220.7K. Second, the net unemployed surged 11.3K in July from a mere 0.2K in June.

• Finally, those outside the labour force i.e. housewives, students (including those going for further studies), retirees, disabled persons and those not interest in looking for a job rose 2.0% y/y to 7.15mil in July. This segment makes up 32.5% of the labour force. We suspect there could be an increase in the number of students and also those venturing into informal micro businesses.

• We expect the unemployment rate to stay around 3.3% – 3.4% by end-2017 from 3.5% in 2016. The better-than-expected GDP growth projected for 2017 at 5.7% – 5.9% should still keep the net jobs created position on a positive trajectory. The healthy 1H2017 GDP of 5.8% saw the net number of placed registrants standing at 1,644K versus a net placement of -861k in 1H2016 and -1,108k for the full year of 2016.

Source: AmInvest Research - 19 Sept 2017