SINGAPORE – The number of retrenchments and unemployed residents in Singapore rose in the third quarter of 2023 as a weaker economic outlook dragged down sectors such as wholesale trade.

But the labour market continued to expand for the eighth straight quarter, with increases for both residents and non-residents.

While unemployment rates remained low, the Ministry of Manpower (MOM) cautioned on Thursday that unemployment has been on a slow uptrend and may continue to rise further, as it released preliminary labour data for the quarter.

Retrenchments rose by 900, from 3,200 in the second quarter to 4,100 in the third quarter, with the majority of the increase from wholesale trade.

Activities in the wholesale trade sector range from the buying and selling of goods to storage and warehousing, as well as marketing, according to the Ministry of Trade and Industry.

It is the second-largest sector in Singapore’s economy, making up 18.6 per cent of nominal gross domestic product in 2022 and employing more than 300,000 people as at December 2022.

The sharp increase in retrenchments reflects the weaker external outlook the sector faced, MOM said.

It added that the number of retrenchments in other sectors remained broadly stable or declined.

The 11,120 retrenchments in 2023 to date is almost double the 6,440 recorded in the whole of 2022.

Business reorganisation or restructuring remained the top reason for retrenchments in the quarter, MOM said.

The construction sector retrenched 200 people in the third quarter, while 800 were laid off in manufacturing over the same period.

Meanwhile, the services sector, which includes wholesale trade, laid off 3,100 people, up 550 from the 2,550 in the previous quarter.

There were 68,000 unemployed residents, comprising Singaporeans and permanent residents, in September, up more than 3 per cent from the 65,600 recorded in June.

Still, the ministry said the unemployment rate held largely stable in September, at 2 per cent overall, 2.8 per cent for residents and 3 per cent for Singaporeans.

“This suggests that most retrenched workers have been able to find new employment quickly.”

It also noted that those rates remain low compared with the average from 2013 to 2022 of 2.4 per cent overall, 3.3 per cent for residents and 3.4 per cent for Singaporeans.

Total employment, excluding migrant domestic workers, grew by 24,000 in the third quarter, marking the eighth consecutive quarter of growth.

This increase is comparable to the previous quarter, with the growth coming from both residents and non-residents.

MOM said: “Resident employment expanded in growth sectors such as financial services and professional services, which generally had higher-paying jobs, as well as in health and social services.

“Meanwhile, non-resident employment expanded in sectors such as construction, retail trade, food and beverage services, and administrative and support services.”

Nonetheless, the ministry said the pace of employment growth has slowed compared with a year ago, amid the global economic slowdown and as business expectations worsened in September 2023.

The proportion of firms that indicated an intention to hire in the next three months fell from 58.2 per cent in June to 42.8 per cent in September, which MOM noted was lower than in June 2020 during the Covid-19 pandemic.

The proportion of firms with an intention to raise wages dropped as well, from 28 per cent to 18 per cent over the same period.

Finalised labour data for the quarter will be released in mid-December, and will include more details such as the breakdown of resident and non-resident employment, various sectoral breakdowns, number of job vacancies, labour turnover, and re-entry rates among retrenched residents.

OCBC chief economist Selena Ling said the retrenchments remain concentrated in specific industries such as wholesale trade. This reflects weakness in the conditions that drive global demand, including in markets such as China.

Still, there are no signs of widespread or broad-based retrenchments at this time.

“Even if unemployment rates gradually creep higher, I would not be overly alarmed, as it is starting from a fairly low base,” said Ms Ling.

She added that the decline in firms planning to raise wages is a reflection of growing caution over external demand and the economic outlook, as well as the gradual easing of domestic inflation.

Employment in the manufacturing sector contracted for the first time since the third quarter of 2021, albeit by a modest 100 workers, she noted.

As for the construction sector, employment grew at the slowest pace since the fourth quarter of 2021.

Employment growth in the services sector, however, has accelerated from the previous quarter.

Ms Ling said: “The improvement in the tourism and hospitality sectors may also support near-term employment conditions and offset the soft patch in manufacturing and wholesale trade.”