● The unemployment rate fell to a 29-month low to 3.7% in July (Jun: 3.8%), suggesting a further tightening in the labour market

- Unemployed persons (-1.6% MoM; Jun: -1.1%): fell for the twelve-straight month and at a faster pace than the preceding month.

- Consequently, the number of unemployed persons fell to 620.7k (Jun: 630.6k), almost reaching pre-pandemic levels (Mar 2020: 610.5k), which reflects solid economic recovery.

● Employment expanded for the twelve-straight month (0.3% MoM; Jun: 0.2%) and subsequently increased total employment to 15.98m person, a record high

- Labour force: growth remained unchanged (0.2% MoM; Jun: 0.2%) for the third straight month, with the total labour force expanding to a record high of 16.60m persons (Jun: 16.57m).

- New job creation: expanded (42.1k; Jun: 36.3k).

● Labour force participation rate expanded (69.6%; Jun: 69.5%)

- The number of those outside the labour force fell for the twelve-straight month (-0.1% MoM; Jun: -0.1%) to 7.25m, the lowest since March 2020, as more people are looking for work.

- This is also associated with higher vacancies which increased by 9.5% MoM in June (May: 0.7%) to 508.0k.

● Steady labour market conditions among advanced economies

- JP: unemployment rate remained unchanged for the third straight month in July (2.6%; Jun: 2.6%) amid increased availability of jobs.

- US: expanded in August (3.7%; Jul: 3.5%) as more people entered the labour force and actively looked for work.

● 2022 unemployment rate forecast retained at 3.9% (2021: 4.6%) amid sustained improvement in the domestic economic condition

- The number of unemployed persons is expected to continue declining in the coming months attributable to sustained job openings due to solid post-pandemic recovery, especially in tourism-related activity as the nation moves towards endemicity and the increase in tourist arrivals. This will be further supported by ongoing government policy support such as the wage subsidy and hiring incentive program and the increase in minimum wage level.

- Given the positive start of labour market conditions in 3Q22, we expect the recovery momentum to remain intact and support our 3Q22 GDP growth projection of 8.8% (2Q22: 8.9%) on strong private consumption and sustained expansion in the services sector. Therefore, we retained our 2022 GDP growth forecast at 5.5% - 6.0% (2021: 3.1%) and expect growth to moderate in 2023 to 4.3%.

Source: Kenanga Research - 12 Sept 2022