Goldman Sachs Sees Slower China Wage Growth, Higher Unemployment

  • Analysts: Pay gains slowed to 7.3% in 1Q, will be 6.7% in 2017
  • Implied 6.5% unemployment rate is higher than official levels

China’s pay gains are trending down and unemployment is higher than government figures show, according to Goldman Sachs Group Inc. analysts who describe the nation’s wages data as "among the least transparent official statistics."

Wage increases may have slowed to 7.3 percent in the first quarter from more than 10 percent in 2013, and will decelerate further to 6.7 percent in 2017, analysts including Maggie Wei wrote in a report. The estimates are based on an indicator constructed by the economists from various official indexes.

"An extended moderation in wage growth could weigh on consumption growth as the slowdown in revenue growth in both the industrial and services sectors spills over to household sectors and consumption," the economists wrote. "While any deceleration in wage growth would be another modest headwind to economic growth, more stimulative policies could be rolled out to support consumption growth."

China’s official wage data are only released annually, the latest being 10.1 percent in urban areas in 2015. The urban registered unemployment rate has barely budged for five years and excludes about 270 million migrant workers whose jobs are more vulnerable in economic downturns.

The nation’s jobless rate is set to climb to 6.5 percent this year, according to Goldman’s estimates. That’s higher than the official survey-based unemployment at about 5 percent and the registered rate at about 4 percent.

— With assistance by Xiaoqing Pi

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