The unemployment rate was sustained at 3.3% in August for the fourth straight month, matching the seasonally adjusted rate, as labour force and hiring were flat during the month. Unemployed persons down by 0.9% MoM (Jul: 0.7%), the steepest drop in eleven months, bringing the total unemployed persons to 520.2k (Jul: 524.8k).

● Similarly, the labour force growth was unchanged on MoM (0.3%), with the overall labour force remains at 15.7m persons in August for two straight months.

● Employment growth was also unchanged on MoM (0.3%), with new jobs creation increased at a slower pace to 6.0k (Jul: 45.2k), signalling moderate hiring activities, amid lacklustre demand conditions faced by firms, especially in the export-oriented and manufacturing sectors. This is evidenced by a contraction of 0.01% MoM in employment of the manufacturing sector in August (Jul: 0.6%).

● Labour force participation rate inched up marginally to 68.6% (Jul: 68.5%), reflecting an improved growth of those inside the labour force relative to those outside the labour force (-0.5% MoM).

● In July, the number of job vacancies surged to 51.8% MoM to 90.8k vacancies after it recorded two successive months of decline. Of note, vacancies were mostly posted in the manufacturing sector (31.5% share) and predominantly comprised of low-skilled jobs, contributing to as much as 69.4% of overall vacancies created in July.

● Stable labour conditions globally. In the advanced region, the US jobless rate unexpectedly fell to a 50-year low of 3.5% in September (Aug: 3.7%). Similarly, EU jobless rate dipped to a 20-year low of 6.2% in August. Regionally, unemployment rate in Thailand remained at 1.0% in September for two straight months.

● Overall, we maintain our unemployment rate forecast of 3.5% for this year, up from 3.3% recorded in 2018 mainly due to the downside risk from the external sector which would weigh on domestic manufacturing activities, evidenced by sluggish Manufacturing PMI in September, and a fall in trade performance in August. This may result in moderation in job creations in the near term, in line with our growth projection of softer economic expansion for this year (4.5%; 2018: 4.7%).

Source: Kenanga Research - 14 Oct 2019