● The unemployment rate fell to 3.8% in June (May: 3.9%), suggesting further improvement in the labour market

- Unemployed persons (-1.1% MoM; May: -1.8%): fell for the eleventh straight month, reflecting sustained recovery.

- The number of unemployed persons fell to 630.6k (May: 637.7k), almost reaching pre-pandemic levels (Mar 2020: 610.5k).

● Employment expanded for the eleventh straight month (0.2% MoM; May: 0.3%), albeit at a slower pace. The persistent new job creation subsequently increase employment to 15.94m person, a record high

- Labour force: growth sustained (0.2% MoM; May: 0.2%), and raised the total labour force to a record high of 16.57m persons (May: 16.54m).

- New job creation: increased at a slower pace (36.3k; May: 46.5k).

● Labour force participation rate remained high (69.5%; May: 69.5%)

- The number of those outside the labour force fell for the eleventh straight month (-0.1% MoM; May: -0.1%) to 7.25m, the lowest since March 2020, as more people are searching for new jobs.

● Slower recovery in labour market among regional economies

- KR: unemployment rate expanded for the second straight month in June (2.9%; May: 2.8%) but remained below 3.0% amid rising inflation and interest rates.

- JP: unemployment rate remained unchanged (2.6%; May: 2.6%) despite increased job availability.

● Unemployment rate forecast retained at 3.9% (2021: 4.6%), banking on further economic improvement

- We maintain our outlook that the number of unemployed person is expected to continue declining in the coming months, underpinned by strong post-pandemic recovery as the nation shifts to endemicity. This will be further supported by the ongoing government policy support, such as the wage subsidy program and a further improvement in the services sector, especially related to tourism activity.

- Given the solid recovery in labour market conditions with the unemployment rate improving to 3.9% in 2Q22 (1Q22: 4.1%), we expect 2Q22 GDP growth which is slated to be released this Friday, to expand to 7.7% (consensus: 6.7%; 1Q22: 5.0%) amid expected strong private consumption and expansion in the services sector. Therefore, we retained our 2022 GDP growth forecast at 5.0% - 5.5% (2021: 3.1%).

Source: Kenanga Research - 10 Aug 2022