Singaporean domestic labor market stabilizes in Q3, labor demand likely to pick up in Q4

Singaporean domestic labor market has stabilized; however, it is still a bit away from boosting short-term wage inflation, noted OCBC bank in a research report. This strengthens the recent monetary policy decision of MAS to maintain a neutral policy stance during the October MPS. The slack in the labor market has not vanished, despite the gradual and modes improvements in hiring intentions and business sentiment. Therefore, the wage inflation is not expected to rear its ugly head in the near-term.

Labor demand next year is expected to be supportive amidst the generally benign macroeconomic environment and rise in consumer confidence levels, and as the growth and redundancy drags from the construction and offshore marine sectors begin to ease, stated OCBC Bank.

The overall and citizen jobless rate dropped 0.1 percentage point to 2.1 percent and 3.2 percent respectively in the third quarter, while the resident jobless rate was stable at 3.1 percent. The overall jobless rate continues to be higher than the 1.7 percent low seen pre-GFC in the third quarter of 2007.

The drop in total employment has eased to 2.5k in the third quarter, down from the first half of 2017 and a year ago, as the rise in hiring for services partially countered the work permit holders contraction in marine and construction.

According to MOM, labor demad is expected to pick up in the fourth quarter of this year, consistent with seasonal hiring as seen in previous years. Hiring continues to be selective throughout sectors.

“Overall, the resident unemployment rate could remain elevated in the medium term due to on-going economic restructuring, shift in composition of resident labour force and job-skills mismatch”, added OCBC Bank.

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