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South Korea's Unemployment Rate Drops to 2.7% in August, Inflation Expectations Dip
Confirmed
In Short: South Korea's unemployment rate fell to 2.7% in August, according to the New York Fed, while inflation expectations for the next year dropped to 3.58%, reflecting a mixed labor market outlook.
The South Korean unemployment rate dropped to 2.7% in August, a slight improvement from the previous month's 2.8%, according to the New York Fed's Survey of Consumer Expectations. However, inflation expectations for the next year dipped to 3.58%, down from the forecasted 3.6% and the previous month's 3.63%.
Households' expectations about the labor market remained mixed, with unemployment and job finding deteriorating, while job losses and quit expectations improved. The 1-year inflation expectations fell, while 5-year and 3-year-ahead expectations remained unchanged at 3% and 3.2%, respectively.
Economists had expected overall hiring to be just 53,000 roles and a steady unemployment rate, but the August number was much stronger, with job growth tracking at about 80,000 roles per month. July's number was revised up sharply by 44,000 to a total net job additions of 21,000, after being recorded as a negative 23,000.
Despite the strong job growth, wage growth remained a concern, at 3.1% year-over-year in August. President Donald Trump, however, praised the report, calling for the Federal Reserve to lower interest rates immediately.
What's still developing
- This, along with firming expectations for another RBA rate hike later this month, acts as a tailwind for the Aussie.
- Nevertheless, the upside attempts resemble technical corrections for now as Japan's upbeat wage growth data and Q2 GDP revision cement bets on a BoJ rate hike next week and continue to support the Japanese Yen.
- When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy.
- Expectations in August of higher unemployment rate were highest since April 2020.
- Consumers in August projected higher future gasoline prices.
- Views about current and future personal financial situations deteriorated in August.
- “August’s blowout jobs report provided evidence of a stable labor market heading into the fall, supporting resilient consumer spending but also raising market expectations for a near-term Fed rate hike amid unacceptably high inflation,” Wells Fargo’s Jennifer Timmerman said.
- The inflation rate in July was 3.4% from a year ago, but that was before energy prices started climbing again.