Singapore's unemployment rose to the highest in over 3 years in the first quarter as the economy suffered its worst ever recession, but manufacturers are turning less bearish on prospects for the next six months.
The unemployment rate rose to 3.2 percent on a seasonally adjusted basis, the highest since the third quarter of 2005 and rising from 2.5 percent at the end of 2008, as the manufacturing sector shed jobs, government data showed on Thursday.
The unemployment rate among the resident labour force rose to a 5-year high of 4.8 percent in the first quarter from 3.6 percent in the fourth quarter.
"Unless the recovery is swift, further job losses probably lie ahead of us," said economist Wei Zheng Kit of Citigroup in a report on Thursday, adding unemployment this year could peak slightly under its forecast rate of 4.8 percent.
The manufacturing sector saw the largest contraction of employment in the first quarter of 2009 with a loss of nearly 20,000 jobs from the previous quarter. The sector laid off 9,000 workers, mainly in the electronics industry.
The construction and services sectors, however, saw an increase of 8,500 and 10,300 jobs respectively.
Unemployment is rising around the world as the global economic recession has wiped out demand for goods and services.
Singapore, Southeast Asia's most open economy and the first to enter recession in 2008, has been hit hard.
"Falling external demand has severely affected the manufacturing sector," the Ministry of Manpower said.
However, Singapore manufacturers have turned less pessimistic on their business prospects, a separate government survey showed on Thursday, as fewer anticipate a less favourable business environment in the next six months.
A net weighted 33 percent of manufacturers said they expect business conditions to deteriorate in the next six months to September 2009, compared with 57 percent in the January survey, Singapore's Economic Development Board said.
Investors have taken comfort from signs the economic slump might be easing, leading to a rally in Asian currencies and world stocks on Thursday.
"It looks like money is coming to Asia now and we see the Singapore dollar is going to be strong in the next six to 12 months," said Johanna Chua, Citigroup's trading strategist in Hong Kong.
The central bank, which manages the Singapore dollar as its main monetary policy tool, said on Wednesday the worst may be over for Singapore's economy after its deepest ever contraction in the first quarter, but the outbreak of swine flu clouds the outlook for this year.
- Reuters
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