THE impact of a steadily growing Philippine economy has been instrumental in bringing unemployment in the country down to its lowest level in perhaps 11 years, a Nomura research said.
Nomura Global Economics said in its “Asia Chart Alert – Philippines: Another sharp drop in the unemployment rate,” the unemployment rate “fell sharply to 5.4 percent in the three months to July from the 6.1 percent rate as of April.” The report was released on Tuesday.
In the latest government Labor Force Survey (LFS), the Philippine Statistics Authority last week reported the unemployment rate eased to 5.4 percent in July 2016 from 6.5 percent a year earlier.
The officially released government data also showed the underemployment rate declined to 17.3 percent from 21 percent in the year-earlier period, while the employment rate increased to 94.6 percent from 93.5 percent.
Joblessness in the country is expected to be alleviated further by higher budget allocations to infrastructure development as promised by the Duterte administration.
“On a seasonally adjusted basis, we estimate that it dropped to 5.3 percent from 5.9 percent, the lowest print since the new series was adopted in 2005. This, we believe, reflects not just election-related effects but is a continuation of an unemployment downtrend in recent years due to sustained economic growth which is becoming increasingly investment-led,” Nomura said.
“Employment growth has, indeed, been broad-based, increasing in the manufacturing and construction sectors, and still holding up in services. This is likely to continue as the government is focused on making growth more inclusive and on accelerating infrastructure spending,” the research report said.
“These, along with further reforms in the pipeline, should, in our view, help attract more foreign direct investment [FDI],” it added.
According to central bank data also released on Tuesday, the net FDI inflow reached $4.2 billion in the first half of the year – up 94.9 percent from $2.2 billion a year earlier.
Going forward, Nomura said the decline in the unemployment rate “is consistent with our CPI [consumer price index]inflation forecast that it moves toward the upper end of the central bank’s 2-4 percent target by next year.”