Labour market softens

The jump in China’s unemployment rate from 4.9% in December to 5.3% last month, the highest in nearly two years, has added to the worries about the economy. The survey-based unemployment rate may not be the most reliable indicator of labour market conditions. It is relatively new and unproven (the data start in January 2017) and the latest figures could be influenced by the usual churn in the job market around Chinese New Year. Nonetheless, other job market indicators, including the employment components of the PMIs, also point to a softening in conditions. We expect officials to respond to this weakness by stepping up policy support over the coming months.