South Korea Jobless Rate Holds at Three-Year Low of 3.1% on Service Sector

South Korea’s unemployment rate held at a three-year low last month as service industries hired more workers to meet growing demand.

The jobless rate stood at 3.1 percent in November, unchanged from October, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 10 economists was for a rate of 3.2 percent.

South Korea’s job market is showing resilience even as the deepening debt crisis in Europe and slowing global growth threaten to cool an economy that has grown for 11 straight quarters. Industrial production unexpectedly fell in October while department store sales also dropped.

“Labor market conditions will likely worsen due to rising uncertainties in Europe,” Lee Sung Kwon, an economist at Shinhan Investment Corp. in Seoul, said before the release. “The central bank and government may try to support growth with lower interest rates and more fiscal spending.”

The won declined 0.6 percent to close at 1,153.99 per dollar as of 3 p.m. in Seoul yesterday, according to data compiled by Bloomberg. The benchmark Kospi stock index slid 1.9 percent.

Growth Cut

Amid signs of a slowdown, the Bank of Korea last week kept borrowing costs unchanged at 3.25 percent for a sixth month, the longest pause since tightening began in July 2010.

The central bank last week cut its growth forecast for next year to 3.7 percent from 4.6 percent estimated in July, compared with a 3.8 percent gain this year.

The government projected the same growth on Dec. 12, with Finance Minister Bahk Jae Wan hinting that an extra budget may be needed in case of a sharp economic slowdown or downturn because of Europe. About 280,000 jobs are expected to be created next year, compared with 400,000 jobs this year, according to the Finance Ministry.

The seasonally unadjusted jobless rate stood at 2.9 percent in November, unchanged from October, today’s report showed. The number of employed people increased by 479,000, or 2 percent, to 24.589 million last month from a year earlier.

Employment in manufacturing fell 2.1 percent from a year earlier, while the number of people self-employed or working in government jobs increased 3.1 percent.

The number employed in the electricity, transportation, telecommunication and finance industries rose 5.7 percent, while jobs in the agricultural, fishery and forestry industries declined 0.7 percent.

The health and welfare service sector added 113,000 jobs. Wholesalers and retailers added 109,000 jobs in November from a year ago, the data showed.

The government plans to create more jobs in the public sector to support the job market as the expected economic slowdown damps hiring at private companies.

State-run firms and agencies will recruit 14,450 workers next year, 40 percent higher than this year’s hiring, the Finance Ministry said in a statement yesterday.

To contact the reporter on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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