South Korean manufacturing hiring to remain under pressure in short term

South Korea's December's seasonally adjusted jobless rate was stable at 3.4%, as compared with the forecast of 3.5%. The rise in farm jobs and construction activity assisted the rate. Farm hiring increased by 77,000 in December as compared with drop of 37,000 in November. Meanwhile, other services increased the hiring in private services. Other services added 66,000 jobs in December, as compared with decline of 17,000 in November, helped by hiring boost in healthcare, education and business support services. However, loss of jobs in commerce and finance by 19,000 in December offset the strong job gains. Job hiring in public administration declined 15,000 in December after strong hiring of 43,000 in November and 24,000 in October. Job hiring in manufacturing continued to be slow, mainly in small firms weighed down by higher inventories.

"Employers also echoed our view that the challenging export environment will cut into job growth in 2016", says Barclays.

There was an increase in the job creation in private sector services in December, increasing by 38,000, as compared with rise of 2,000 in November and 7000 in October. The rise was mainly in other services, which recorded a rise in the job creation of 66,000. However, decline in finances by 19,000 and in commerce by 9000 offset the increase in hiring in other services. The hiring in manufacturing grew by only 5000 in December making its outlook weak. This is mainly due to growing vulnerability in the shipbuilding sector.

"We expect manufacturing hiring to remain under pressure in the near term amid elevated inventory levels", says Barclays.

77000 jobs were added in the agriculture sector after losing jobs for four continuous months. The hiring in construction sector increased by 52,000 in December, as compared with an increase of 10000 in November and 30000 in October.

"We believe the softness in external-oriented sectors will keep the BoK's monetary stance accommodative", says Barclays.