July jobless rate dips, but experts call for caution

As optimism grows that the global economy is close to turning a corner, Korean government data yesterday showed the jobless rate in July fell for the first time this year.

Analysts, however, stayed cautious, saying job market data, used by many to confirm an economic recovery, still remains troublesome. The July employment outlook by the National Statistical Office showed that the seasonally adjusted unemployment rate stood at 3.8 percent in July, compared with 4.0 percent in June. The seasonally-adjusted figure began the year at 3.3 percent.

“With economic indicators such as industrial output and the growth rate seeming to show that the worst is behind us, we expect employment data to show a similar trend,” said Jeong In-sook, head of the employment statistics team at the NSO.

On Sunday, the International Monetary Fund revised upward its outlook on Korea’s growth rate for the year from negative 3.0 percent to negative 1.8 percent, reflecting the country’s 2.3 percent growth in the second quarter from a quarter earlier. The Organization for Economic Cooperation and Development also said in a recent report that Korea will see on-year growth beginning in the fourth quarter. Its industrial output rose for the sixth consecutive month in June.

Analysts say the decrease in the jobless rate is in part due to the growing number of frustrated job seekers exiting the job market. The number of the economically inactive - those who did not pursue a job for at least six straight months and are not counted as jobless - stood at 15.37 million, up 218,000 from a month earlier.

“Jobless data can move either upward or downward for various reasons,” said Lee Sang-jae, a senior economist at Hyundai Securities. “Looking at the employment data, which I think draws a more accurate picture, things are still not good.”

The seasonally adjusted number of jobs fell 40,000 to 23.54 million in July from a month earlier. The employment-to-population ratio fell by 0.4 percentage point from June to 59.4 percent. “There were some improvements in the public administration sector thanks to the job creation policies, but the job market overall is yet to start a genuine recovery,” Lee said.

Go You-sun, a macroeconomy analyst with Daewoo Securities, said “employment won’t get better until next year when I think private consumption and investment can recover.”

By Moon Gwang-lip [joe@joongang.co.kr]