South Korea’s jobless rate unexpectedly dips to lowest since October

SOUTH Korea’s jobless rate unexpectedly fell to the lowest level since October, giving the central bank further incentive to delay a policy pivot.

The seasonally adjusted unemployment rate declined to 2.5 per cent in July from 2.8 per cent a month earlier, the statistics office said on Wednesday (Aug 14). Economists surveyed by Bloomberg had forecast the figure would edge higher to 2.9 per cent.

The number of jobs grew by 172,000 from a year earlier, with the labour force participation rate at 64.9 per cent.

The tightening of the labour market is a bright sign for the economy and may put upward pressure on prices. Bloomberg Economics estimates that the unemployment rate would have to rise to 3.2 per cent to be neutral for inflation. With authorities increasingly concerned about rising home prices, the data could add to the case for keeping monetary policy restrictive.

The Bank of Korea is expected to hold its policy settings steady when the board meets next week. Many economists recently pushed back their timelines for an expected pivot to easing, pencilling in October as the most likely month. Last week, former board member Lee Seung-heon said a cut in October would be difficult. BLOOMBERG