Labor market weakness points to softer household demand
Unemployment rose to 5.3% in August from 3.9% same period last year but is an improvement from July's 6.0%.
AB Capital reports a weakening labor market that could lead to reduced household demand. Unemployment rose to 5.3% in August from 3.9% the same time last year, but is better than July's 6.0%. However, average working hours fell to 39.2 from 41.0, indicating soft labor income growth despite some improvement from July. The economy's capacity to absorb new workers seems limited, with only 470,000 new jobs created for the 897,000 people who entered the labor force.
Underemployment rose year-over-year. While seasonal hiring in retail and manufacturing might offer some support in the fourth quarter, the recovery may be uneven. The manufacturing sector lost 350,000 jobs year-over-year for a third consecutive month. Additionally, a strong El Niño could reverse recent agricultural employment gains and further strain rural incomes.
The labor data suggests a preference for defensive and value-oriented consumer exposure, such as PGOLD and JFC, as weaker employment and shorter working hours could constrain real household spending, even before considering higher inflation. Selective exposure to discretionary retailers and lenders with faster unsecured consumer loan growth is recommended.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
