South Korea's weak domestic demand constrains job creation

The seasonally adjusted unemployment rate held steady at 3.7% in April, after ticking lower in March from a February high (March: 3.7%; February: 3.9%; January: 3.4%), in line with consensus. 

The economy was expected to absorb job seekers at a slightly faster pace. On a seasonally adjusted basis, the improvement was partly helped by a further 74k withdrawal (March: -186k; Feb: +249k) from the labour force. 

This was mainly due to a second straight monthly decline (-94k; March: -124k) in the pool of employed workers, which reversed the net job additions in January (+76k) and February (+126k). 

Nonfarm private sector jobs climbed, albeit by only 6k, even after a significant 165k decline in March (February: +158k; January: +46k). 

A factor of concern is sluggish job creation in the services sector, with private services jobs declining for a second month in April (-32k; March: -110k). 

This is masking the lift in job creation from the manufacturing sector, led by exporters. Likewise, the drop in the participation rate to 62.4% in April (March: 62.6%; February: 63.1%; January: 62.2%) is likely to be a pause. 

This is perhaps a sign that the government's three-year plan for economic innovation aimed at rejuvenating the hiring potential in key services industries is not bearing fruit fast enough.