Unemployment rate to marginally increase to 2.4% in H123

RHB said the uneven recovery of the economy will likely impact labour demand.

Analysts expect Singapore’s economic recovery to be uneven in the first half of the year, which, in turn, will impact labour demand, particularly in the external-facing industries.

“We think that labour demand in electronics, chemicals, precision engineering and wholesale trade to remain lacklustre into 1H23, given the potential trade headwinds in these sectors over the same period,” RHB said.

For the first half of the year, RHB said the unemployment rate will likely increase to 2.4%. By the end of 2023, RHB expects the rate to recover to its 2.0% handle.

On the flip side, RHB said the expected increase in the unemployment rate in the next six months” remains starkly below the 3.4% rate seen in 3Q20 during the COVID-19 pandemic.”

“Moreover, today’s data do not spell any recessionary cues but rather underline the continued tightness seen in Singapore’s labour market – total employment rose at its record level in 2022, while hiring sentiments remain positive, as cited by company polls,” RHB added.

To help the unemployed, RHB believes the 2023 budget will include policies such as unemployment support for retrenched workers in FY2023.