The unemployment rate in January rose slightly to 3.4% due to lower net jobs created in January at 30.4K and marginally higher labour force participation at 68.2%. Besides, the number of people outside of the labour force (housewives, students including those going for further studies, retirees, disabled persons and people seeking employment) fell marginally by 0.1% m/m to 7.07mil people in January.

With the economy poised to grow at a 5.5% in 2018 from 5.9% in 2017, we should see the labour market remaining firm with the unemployment rate hovering around 3.2% – 3.3%. However, upwards pressure on the labour market cannot be ruled out with the growing digital economy, which is expected to contribute about 20% to the GDP by 2020. It can happen when individuals at all levels fail to actively develop their skills and stay relevant, and instead challenge the current changing trends in their respective sectors. Many sectors are being reshaped by technology, creating new roles and also different demands for those in existing jobs. Besides, automation is also impacting the labour market. It can push up the unemployment rate to 3.4% – 3.6%.

• The unemployment rate in January rose slightly to 3.4% from 3.3% in the December 2017. The total number of unemployed in January stood at 516.5K people, up 10.7K from December’s reading.

• We believe the slight increase in the unemployment rate was due to lower net jobs created in January and higher labour force participation. Net jobs created in January was 30.4K. It is equivalent to 49.7% and 33.7% of the net jobs created in December 2017 and January 2017 respectively. The labour force participation rate rose marginally in January to 68.2% from 68.1% in December or up 0.2% m/m and 2.1% y/y to 15.187mil people.

• Meanwhile, we noticed the number of people outside of the labour force (housewives, students including those going for further studies, retirees, disabled persons and people seeking employment) dropped marginally by 0.1% m/m to 7.07mil people in January, accounting for 31.8% of the working population.

• With the economy poised to grow at a 5.5% in 2018 from 5.9% in 2017, we should see the labour market remaining firm. We project the unemployment rate to hover around 3.2% – 3.3% in 2018 from 3.3% in 2017. Some stickiness is envisaged in the labour market. It is due to the growing digital economy which is expected to contribute about 20% to the GDP by 2020.

• Individuals at all levels will need to actively develop their skills, stay relevant and not challenge the current changing trends in their respective sectors. The reason being, many sectors are being reshaped by technology, creating new roles and also different demands for those in existing jobs. Besides, automation is also impacting the labour market. Failing to do so will potentially affect the labour market data with the unemployment rate expected to inch up to around 3.4% – 3.6%.

Source: AmInvest Research - 16 Mar 2018