Singapore's jobless rate rose to a one-year high as firms slowed hiring amid choppy financial markets and a weakening global economy, and analysts warned that unemployment may climb in coming months.
CNBC.com
The jobless rate rose to 2.3 percent in the April-June period after seasonal adjustments, compared to 2 percent in the previous quarter, the Ministry of Manpower said in preliminary data on Thursday.
Employment rose by 70,600 in the second quarter, slowing from a rise of 73,200 in the January-March period.
Economists said the rising jobless rate was evidence that the economic slowdown had extended beyond economic data and was spreading into the real economy, although Singapore's labor market is still expected to remain tight this year.
"The labor market is going to soften as growth ... slows," said Irvin Seah, an economist at DBS. "We don't expect a sharp rise in retrenchments but things are going to move along at a slower pace."
Economists said the tight labor market -- the unemployment rate was at a 10-year low in the fourth quarter -- may fuel price pressures in Singapore where inflation is at a 26-year high.
"The labor market is still tight but it is moving towards a more sustainable pace that will soften the margin squeeze on companies," Seah said.
The booming construction industry created a record 22,100 jobs in the second quarter, compared to 14,500 in the first three months of the year, as building deals carried over from last year's red-hot property market -- which has since cooled -- continued to fuel activity.
Services, which includes the key financial sector, added 37,600 jobs in the April-June period, slowing from the first quarter when 46,500 jobs were created.
Employment in manufacturing rose by 10,200, down from an increase of 11,800 in the first quarter.
Retrenchments in Singapore fell to 1,900 in the second quarter from 2,274 in the previous quarter.
Heng Swee Keat, Singapore's central bank chief, said this month unemployment rate is seen at 2 percent for 2008.
Economies across Asia are expected to slow this year as growth in the key U.S. and Europe export markets weaken, while demand in emerging markets are not as strong as hoped.
Singapore's trade-driven economy, a barometer for global demand for Asian exports, shrank an annualized and seasonally adjusted 6.6 percent in the second quarter, its biggest contraction in five years.