Labour market is softening in Singapore

The labour market is softening in Singapore. Although overall employment grew by 16,400 in the third quarter, which is faster than in the last quarter (9,700), this is significantly less than the number a year ago (33,400). Meanwhile, employment in manufacturing contracted (-4,300) for the fourth consecutive quarter while services has added significantly less jobs (17,000 vs 29,400 in 3Q14). Separately, employment growth in the construction sectors has remained stable (3,800). Plainly, the moderation in employment growth is reflective of the current cyclical slowdown amid the dicey external environment. 

In addition, although overall unemployment rate has remained stable at 2.0% sa, the corresponding figure for residents and citizens have increased marginally for the second consecutive quarter (3.0% and 3.1% respectively versus 2.8% and 2.9% in Jun15). The main explanation is that the locals are mainly engaged in higher skilled jobs (i.e. PMETs) and these are jobs tend to be more susceptible to the external business cycles. In contrast, demand for blue collared jobs (e.g. nurses, construction workers) is usually more inelastic and domestically driven. So, when growth momentum slows, the locals will feel the pinch more than the lower skilled foreign workers. 

The next 6-9 months will be exceptionally challenging. Growth momentum is expected to remain sluggish, which will have repercussion on the labour market. Much will depends on the economic outlook in China. Given the deceleration in China and barring a stronger recovery in the US or the Eurozone, there could potentially be more downside risks on the domestic employment outlook. Time to tighten the belt.