Singapore’s labour market has shown signs of weakening, with the unemployment rate rising to 2.1% in the first quarter of 2025, up from 1.9% in the previous quarter, according to the Ministry of Manpower’s Labour Market Advance Release. This marks the first increase in four quarters, driven by a rise in citizen unemployment to 3.1% and resident unemployment to 2.9%.
The slowdown in job creation, particularly in outward-oriented sectors such as professional services, manufacturing, and information and communications, is attributed to rising global trade tensions and economic uncertainty. Job gains fell significantly to 1,300 in Q1 from 6,700 in Q4, whilst the hiring outlook of firms weakened, with only 40.5% of firms planning to hire, down from 46.3% in the previous quarter.
Despite the rise in unemployment, redundancies remained stable at 3,300, close to the pre-pandemic average. The Ministry of Manpower noted that business reorganisation or restructuring was the primary reason for redundancies, indicating that job losses have been contained so far.
Nomura has adjusted its unemployment rate forecasts, raising the 2025 prediction to 2.4% and the 2026 forecast to 2.9%, reflecting the unexpected uptick in Q1 and a weaker hiring outlook. The firm anticipates further moderation in labour demand, particularly in externally oriented sectors, as the impact of US tariffs becomes more pronounced in the second half of the year.
The subdued labour market conditions are expected to support Nomura’s core inflation forecast of 0.9% for 2025, below the consensus forecast of 1.5% but within the Monetary Authority of Singapore’s range. This aligns with expectations of easing wage growth and continued subdued inflation pressures.
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