The Singapore Job Market: Winter is Coming
Singapore recently reported that its GDP growth rate for Q2 fell to 0.1%, the lowest rate of growth since Q2 2009 and well short of market predictions of 1.1%. It’s the latest set of disappointing GDP results in what has been a continued downward trend for the city state and given the potential for recession and the impact on jobs, I thought a closer analysis would be appropriate.
The Singapore government has explained that the slowing GDP is due to a reduction in the manufacturing sector of 3.8%, as well as a decline in electronics and precision engineering clusters. However Deloitte suggest we may be feeling the effects of the US-China trade war fall out, explaining that the tensions have led to a decrease in Chinese exports meaning that Chinese companies are importing fewer components from other Asian countries. Singapore has been affected in particular because it makes high-value components that are used in electronics products.
Singapore GDP versus Hong Kong
If we compare Singapore’s GDP growth rate to other countries, we see a strong correlation between Singapore and Hong Kong. In the above graph Singapore (in blue) is tracking remarkably close to Hong Kong (in black), not just in the last year but across a five year time frame. We are still to hear what Hong Kong’s GDP growth rate will be for Q2 2019 but given it has the same trajectory we expect it to be very close to zero, if not potentially falling into negative territory.
China also released its latest GDP growth rate recently and although still considerably higher at 6.2%, this is the lowest growth the country has seen in 27 years. China’s falling GDP growth rate has fueled large scale economic fear in the Asia Pacific region.
Singapore GDP versus Unites States of America
Compared to what is happening in the United States, the picture couldn’t be more different. The US has been enjoying steady growth in GDP since 2016 and is climbing in a healthy upward trend, currently standing at 3.1% in Q1 of 2019. While China and South East Asia appear to be suffering from the US-China trade war, the American economy seems to be shrugging off any detrimental effects. The US job market is positive, with America enjoying its lowest rate of unemployment in almost 50 years at 3.6%.
So how is the Singapore economy really? Are we heading for a recession? It does appear that we are heading for a contraction in the economy in Q3, but the truth is, dips in GDP in Singapore rarely last long, with the last technical recession taking place in 2019 following the Global Financial Crisis. There are of course genuine fears over slowing growth in China, international trade tensions and a muddled Eurozone, but globally we can see growth: the budding economies in the US (3.1%) and projected economic growth in the rest of South East Asia. My own personal opinion is that this is just a blip in the overall scheme of things, only 12 months ago in Q2 of 2018 GDP was at a much healthier rate of 4.2% and given the comparative size of Singapore to other economies we are much more exposed to smaller changes in the geo-economic climate.
The job vacancies data in Singapore is not as current as GDP, the latest published figures are from Q1. Here we can see job vacancies standing at 54,700 which although down on Q4, is still 5% up from the same period of Q1 in 2018 when the figure stood at 52,100. Job numbers overall have been creeping up over the last few years and the trend since 2015 is to see a seasonal peak in Q3. Anecdotally we still appear to be heading back to the figures seen in mid-2018 and certainly Elliott Scott HR Singapore experienced healthy demand for roles across all industries. As we recruit purely for Human Resources positions, we feel that we are a good barometer to view the effects of the economy. HR roles are usually the first to be made redundant in a recession while talent acquisition roles will be hired in more positive times. We have had strong activity so far in 2019, with demand being felt for our bread and butter function of HR Business Partners/ Generalists, followed by Talent Acquisition and Learning & Talent roles, which are typically viewed as a luxury in a declining economy. We have also seen a number of newly created roles being hired, although there has been some caution in hiring jobs at the senior end of the market.
In summary we have a prudently positive outlook for the jobs market for the second half of 2019 be it with creeping doubts regarding the overarching global economy.
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