China Slowdown Update: At Least Job Market's Not Falling Apart

Chinese Consumers Projected to Spend $56T by 2025
  • Official measures largely stable, private data more mixed
  • None of the indicators signal mass job losses are looming

For all the angst over China’s economic slowdown, there are few signs of any marked deterioration in the nation’s job market.

The official gauge is as steady as ever, a new survey-based unemployment barometer is also holding up, and the government’s measure of job listings versus seekers suggests there’s plenty of work for those who want it. Other measures are less rosy, with employment sub-gauges in purchasing managers indexes and a privately compiled ratio of positions-to-applicants all showing some deterioration.

Leaders of the world’s biggest labor force have repeatedly said they can tolerate fluctuations in economic growth so long as the employment market holds up. While the latest data taken together show some fraying around the edges, a shrinking working-age population and strength in services hiring have kept unemployment from breaking out, allowing policymakers to keep support measures targeted and press ahead with reforms.

"The job market deteriorated slightly in the last quarter or two, but there’s no sign the situation is out of control," said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. "That’s why the government is still reiterating that it will refrain from large-scale stimulus."

Still, policy makers have already cut interest rates six times in the past year, added fiscal support, and expanded a government-backed bond-swap program to help relieve indebted provincial authorities.

Given the lack of one definitive reading on the jobs picture, economists must scratch a little deeper. Here’s what they’ll see:

Official Measures Largely Stable

China’s official gauge -- the urban registered unemployment rate -- has stayed between 3.9 percent and 4.3 percent for at least 13 years. The 4.05 percent reading in the third quarter was almost exactly the same as the last five years, even though economic growth during the same period slowed from about 10 percent to around 7 percent.

One reason the measure doesn’t move: it excludes more than 200 million migrant workers, the most marginal in the jobs market and often first to be fired in a slowdown.

The monthly survey-based unemployment rate is emerging as a more accurate barometer, but it’s only been released sporadically since last year. Sometimes that’s done in speeches by officials, sometimes by state media, and sometimes at press briefings.

The rate in October was "little changed" from the 5.2 percent in September, Xu Xianchun, deputy head of the National Bureau of Statistics, said in an interview at a conference in Beijing on Saturday. That’s up from August’s 5.1 percent, which was also the level for most of last year.

Premier Li Keqiang has said the surveyed rate should be a key gauge to advise policy making. The NBS has expanded the survey to 65 cities from 31 cities, and will continue to extend it to about 120,000 households in some 300 prefecture level cities. The authority will probably start a regular monthly release from March next year, Xu told Bloomberg News on Saturday.

PMI Employment Gauges Show Weaker Picture

The picture gets gloomier when viewed through the eyes of purchasing managers. The employment sub-index of both official and private purchasing managers’ indexes in October stayed below the 50 line that separates improving and deteriorating conditions.

It’s not just manufacturing. The official non-manufacturing PMI’s job indicator has also languished below 50 for nine months.

Ratios of Jobs to Seekers Mixed

The official ratio of jobs available to job seekers was about 1.09 in the third quarter, slightly firmer than the second quarter, according to Ministry of Human Resources and Social Security data collected from employment services institutions in 101 cities. Higher figures represent an increase in the number of job openings relative to applications.

"The labor market is generally relatively active, and the nationwide employment situation is stable," said Zheng Dongliang, a researcher at the ministry, wrote in an article posted on its website. Current job losses stem mainly from the reduction of overcapacity in some sectors, Zheng said.

A similar gauge based on data from recruitment website zhaopin.com shows a more marked deterioration. It slipped to 1.96 in the third quarter from 2.03 in the second and 2.46 in the first, according to a report from the website and China Institute for Employment Research, meaning the number of jobs available compared to the number of applicants is declining. Still, with any numbers above 1 showing demand for workers is higher than supply, there’s no red flag for policy makers here either.

"Demand for labor still exceeds supply, but the entire job market is trending towards weakness," the institute said in the report. "Services sectors such as Internet and finance lead demand, while weakness in manufacturing and real estate sector continues."

Private Survey Shows Resilience Too

The most recent survey of about 28,000 Chinese households shows a jobless rate slightly below 5 percent, according to Gan Li, director of the Survey and Research Center for China Household Finance at Southwestern University of Finance and Economics in Chengdu.

"The job market in China is in good shape," Gan said in an e-mail.

— With assistance by Xiaoqing Pi

Before it's here, it's on the Bloomberg Terminal. LEARN MORE