South Korea’s unemployment rate unexpectedly fell to a seven-month low on increasing numbers of self-employed workers and service-sector jobs even as Europe’s debt crisis dragged down exports.
The jobless rate was at 3.1 percent in July, compared with 3.2 percent in June, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 14 economists was for a rate of 3.3 percent.
The outlook for the labor market is clouded by signs that Asia’s fourth-largest economy is losing steam. A decline in exports in July was the steepest since 2009 and the central bank said Aug. 9 that domestic demand is also weakening.
“Jobs are increasing in the service sector and the self-employed are lifting the total number of workers, but Europe’s fiscal crisis is taking a toll on company hiring,” said Sun Yoo, an economist Woori Investment & Securities Co. in Seoul. “The quality of the job market is deteriorating with more people taking non-salaried work.”
The won weakened 0.3 percent to 1,133.00 per dollar at the 9:00 a.m. open in Seoul and the benchmark Kospi stock index was little changed.
The number of employed people increased by 470,000 to 25.1 million in July, with the self-employed and public services providing 318,000 of those new jobs. The seasonally unadjusted jobless rate was also at 3.1 percent in July, compared with 3.2 percent in June, today’s report showed.
The Bank of Korea kept borrowing costs at a 14-month low on Aug. 9, while saying in a statement that Europe’s debt crisis is deepening. Gross domestic product in Asia’s fourth-largest economy grew at the slowest pace in almost three years last quarter.
“Job market figures have been coming in quite good, but there are an increasing number of self-employed people earning a small amount of income,” said Lee Min Koo, an economist at Eugene Investment & Securities Co. Seoul. “That hidden number not represented in the overall jobless rate will likely drag on the domestic economy.”
South Korean manufacturers’ confidence dropped to a three-year low for August and consumer confidence fell to a five-month low in July, the central bank said last month.