South Korea services hiring post MERS leads unemployment lower

The seasonally adjusted unemployment rate in South Korea improved further in September to 3.5% from 3.6% in August. The pace of hiring in other services and commerce recovered strongly after the shock from the MERS outbreak receded. 

The rebound also coincided with the improvement in the consumer sentiment index, which ticked up to 103 in September after dropping to a two-year low of 99 in June. 

"We believe job creation in services sector of the economy is likely to be the key pillar of support in the near term, alleviating sluggish factory hiring. High inventories  amid slower sales in China will continue to weigh on production", says Barclays. 

The hiring picture is more depressed among smaller manufacturers, some of whom are now saddled with higher inventories, as more of their clients that are larger manufacturers have relocated overseas. The softness in manufacturing is likely to persist through the year end, added Barclays.