Bloomberg News

South Korea’s Unemployment Rate Remains at Half-Year Low

July 13, 2011

(Updates with comments from analyst in fourth paragraph.)

July 13 (Bloomberg) -- South Korea’s unemployment rate stayed at the lowest level in half a year as the economic expansion spurred hiring in the manufacturing sector.

The jobless rate was at 3.3 percent in June, unchanged from May, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 12 economists was for a rate of 3.4 percent.

Sustained job growth is fueling inflation that’s exceeded the central bank’s target since January, prompting the bank to raise the benchmark interest rate three times this year. The Finance Ministry said on June 30 that the nation may add 330,000 jobs this year, more than the earlier estimate of 280,000.

“More jobs and higher wages are pushing up demand-driven price pressures,” Yoon Yeo Sam, a fixed-income analyst at Daewoo Securities Co. in Seoul, said before the release. “The central bank may raise interest rates as early as next month.”

The won fell 0.8 percent to 1,066.43 per dollar as of the 3 p.m. close in Seoul yesterday, according to data compiled by Bloomberg. The benchmark Kospi stock index dropped 2.2 percent, the most since May 23.

South Korean Finance Minister Bahk Jae Wan told at a ministerial meeting in Gwacheon today that the latest job figures are “unexpectedly strong.” The jobless rates in June and May were the lowest since November 2010.

Full-Time Workers

Eight out of 10 companies operating in Korea, including business groups such as Samsung and LG, plan to hire full-time workers in the second half of 2011, according to a survey of 732 firms released by recruitment portal site Saramin HR on June 28.

Central Bank Governor Kim Choong Soo will keep the benchmark interest rate unchanged at 3.25 percent tomorrow, according to 13 of 14 economists surveyed by Bloomberg News, with just one predicting a rate increase. The bank has been boosting interest rates every two or three months since last July from a record-low 2 percent.

Consumer prices rose 4.4 percent in June from a year earlier, the sixth-straight month it exceeded the central bank’s target of 2 percent to 4 percent through 2012. Core inflation, which excludes volatile food and energy items, accelerated to 3.7 percent last month, the biggest gain since May 2009.

The Finance Ministry raised its estimate of consumer inflation to 4 percent this year from the 3 percent projected last December while projecting 4.5 percent economic growth. The central bank will revise its economic forecasts on July 15.

The seasonally unadjusted jobless rate was at 3.3 percent in June, compared with 3.2 percent in May, today’s report showed. The number of employed people increased by 472,000, or 1.9 percent, to 24.75 million last month from a year earlier.

Employment in manufacturing climbed 2.9 percent from a year earlier, while the number of people self-employed or working in the public-service sector rose 2.9 percent.

The number employed in construction fell 2.3 percent, while jobs in the agricultural, fishery and forestry industries declined 1.6 percent.

--With assistance from Sarina Yoo in Seoul. Editors: Ken McCallum, Brendan Murray

To contact the reporters 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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