The latest analysis from UOB Global Economics and Markets Research indicates that Singapore’s labour market is experiencing increased slack, which may reduce the necessity for aggressive monetary policy tightening by the Monetary Authority of Singapore (MAS). The Labour Market Pressure Index (LMPI), constructed using principal component analysis from ten labour market indicators, highlights a decline in recruitment and a rise in redundancies, particularly in the services sector.
In the second quarter of 2026, the recruitment rate fell to 1.4% from 1.6% in the first quarter, whilst redundancies rose to 4,620, up from 3,830. The six-month re-entry rate into employment post-redundancy also decreased to 54.9% from 60.7%. Despite these challenges, the overall unemployment rate edged lower to 1.9% in June 2026, with job vacancies outnumbering job seekers.
UOB’s analysis suggests that the current labour market conditions could temper the impact of supply-side shocks, such as energy price increases due to Middle East conflicts and food inflation from a looming Super El Niño. “These shocks may not necessitate the aggressive pace of MAS tightening seen in 2021-2022,” the report states.
Looking ahead, UOB expects MAS to maintain its current Singapore dollar nominal effective exchange rate (S$NEER) policy settings, with a potential slight slope steepening to address imported inflation risks. This cautious approach reflects recent core inflation surprises and the reacceleration of energy prices.
