● The unemployment rate fell to 4.2% in Dec (Nov: 4.3%), the lowest since March 2020. On average, the unemployment rate settled at 4.6% in 2021 (2020: 4.5%), matching house forecast

- Unemployed persons (-1.0% MoM; Nov: -1.5%): fell for the fifth straight month, reflecting a sustained recovery in the labour market, bringing the number of unemployed persons down to 687.6k (Nov: 694.4k), lowest since Mar 2020.

● Employment expanded (0.2% MoM; Nov: 0.4%), albeit at a slower pace in five months

- Labour force: expanded (0.2% MoM; Nov: 0.3%) at a slower rate and bringing the total labour force to a record high of 16.336m persons (Nov: 16.304m).

- New job creation: sustained increase (38.3k; Nov: 55.7k), but the rate was lowest in five months.

- Manufacturing sector: employment expanded by 0.3% MoM (Nov: 0.6%) with payroll accelerated by 7.8% MoM (Nov: 0.2%), highest since Dec 2018.

● Labour force participation rate expanded for the fifth straight month (69.0%; Nov: 68.9%), a record high

- This is mainly due to people returning to seek jobs as reflected in the lower number of those outside the labour force, which fell for the fifth straight month (-0.1% MoM; Nov: -0.3%) to 7.34m, lowest since Mar 2020.

● Labour market conditions are in relative improving trend in the advanced economies

- US: unemployment rose slightly in January (4.0%; Dec 21: 3.9%) despite a strong 467,000 jobs added and a record wave of COVID-19 cases.

- JP: unemployment rate fell to 2.7% in December (Nov: 2.8%), as recovery in the labour market continued before the Omicront variant spread.

● 2022 unemployment rate is expected to improve to 3.9% (2021: 4.6%) on continued economic recovery

- The labour market may endure a bumpy recovery in the near term due to surging COVID-19 cases brought by the spread of the Omicron variant. Nonetheless, the impact may not be as severe as 2020, given the high vaccinated population rate and aggressive vaccine booster campaign.

- Therefore, the labour market is expected to continue to recover slowly and possibly hit our average forecast figure of 3.9% for the whole year, reaching full employment level in line with the broad recovery in the most economic sector.

Source: Kenanga Research - 9 Feb 2022