Singapore's unemployment rate falls to 3.4 percent

Yesterday, the Singapore Ministry of Manpower released its report on the employment situation in the third quarter of 2004. Excerpt follows:

Recovery in the job market strengthened in the third quarter 2004, supported by the robust economic growth in the first half of this year. Preliminary estimates show that employment increased by 16,600, the strongest quarterly gain in three and half years. This brings the total number of persons employed to 2,176,400 as at September 2004, up 41,200 from the start of the year.

Employment in the goods-producing industries expanded by 7,200. This came on the back of accelerated gains of 8,800 in manufacturing employment... The services-producing industries added 9,400 workers...

Retrenchment has eased further. Preliminary findings... show that 1,700 workers were retrenched in the third quarter of 2004, a reduction of 17% from the previous period.

Preliminary estimates show that the seasonally adjusted overall unemployment rate fell to 3.4% in September 2004 from 4.5% three months back.

The large fall in the unemployment rate was unexpected. A poll by The Straits Times had seen economists forecasting the unemployment rate to fall to 4.3 percent.

In fact, though, employment had expanded at a healthy rate over the past few quarters, and the unemployment rate had been kept high because of the rising number of job-seekers. However, whether the improvement in unemployment can be sustained is another question.

The results of a survey by the Economic Development Board on business expectations of the manufacturing sector for the fourth quarter of 2004 was also released yesterday. Excerpt follows:

A net weighted balance of 12 per cent of the firms foresee a favorable business situation ahead. This is, however, weaker than the net weighted balance of 24 per cent recorded a quarter ago...

A net weighted balance of 15 per cent of the electronics manufacturers expect business to improve in the six months ahead... In terms of employment outlook, a net weighted 2 per cent of the electronics manufacturers plan to hire more workers in the fourth quarter compared to the third quarter of 2004.

A majority of the firms in the chemicals cluster continue to expect a good business environment.. Most of the chemicals firms also anticipate little change in employment in the fourth quarter of 2004.

The biomedical manufacturing cluster anticipates a favorable business environment in the six months ahead... [E]mployment outlook for the biomedical cluster is expected to remain largely similar to a quarter ago.

The precision engineering cluster expects demand to soften in the next six months ending March 2005... A net weighted balance of 11 per cent of the precision engineering firms expect employment to fall in the fourth quarter of 2004.

A majority of the transport engineering firms foresee robust business conditions to continue in the next 6 months ending March 2005... [T]ransport engineering firms plan to hire more workers in the fourth quarter of 2004.

A weighted 76 per cent of the manufacturers plan to invest in plant and machinery in the next twelve months (October 2004 - September 2005) compared to the past twelve months...

In other words, the survey projects continued but slowing expansion. This is similar to the findings from the survey by the US-based Institute for Supply Management (ISM). Excerpt follows:

ISM's PMI registered 56.8 percent in October, a decrease of 1.7 percentage points when compared to 58.5 percent in September. ISM's New Orders Index rose 0.2 percentage point from 58.1 percent in September to 58.3 percent in October. ISM's Production Index decreased 2.7 percentage points from 61.6 percent in September to 58.9 percent in October. The ISM Employment Index is at 54.8 percent for October, a decrease of 3.3 percentage points when compared to the 58.1 percent reported in September.

Next up is Singapore's PMI figures to be released later today.