The Singapore labour market is on track to recover from the impact of the pandemic, with total employment surpassing estimates and growing for the first time since the virus outbreak hit early last year.
But an uptick of Covid-19 cases in May led to tighter restrictions for about a month, possibly putting a speed bump on the path to recovery, said analysts.
Data released last month for the first quarter of this year showed total employment rose by 12,200, after four consecutive quarters of decline - surpassing preliminary estimates of an expansion of 4,800.
The overall unemployment rate remained at 2.9 per cent in April, after three consecutive months of decline from December last year to March this year. This is after the rate hit a peak of 4.9 per cent overall in September last year, the highest since September 2009.
Resident unemployment - tied to Singaporeans and permanent residents - continued to fall, from 4.4 per cent in December last year to 3.9 per cent in April this year.
Among citizens, the jobless rate dipped from 4.5 per cent to 4.1 per cent in the same period. Retrenchments declined for the second consecutive quarter to levels seen in 2018 and 2019. Job vacancies climbed, reaching a new high of 68,400 in March, since the last high of 65,500 in March 2015.
Despite the signs of a rebound, the Singapore labour market is not yet fully back to pre-pandemic conditions, the Ministry of Manpower cautioned in its report last month. Manpower Minister Tan See Leng said recovery "will not be a straight road", and may run into roadblocks.
Tighter restrictions were put in place in May, a setback to plans to gradually reopen the country amid the pandemic.
Before the stricter curbs, the Republic was in the midst of loosening measures, allowing up to eight people to gather socially or in restaurants. People could return to the workplace with some capacity limits. But as community cases saw an uptick, work from home returned as the default mode, and dining in at eateries was banned.
Visitors with recent travel history to Bangladesh, Nepal, Pakistan, Sri Lanka and India were not allowed to enter Singapore. New entry applications for work pass holders from higher-risk countries or regions were also no longer accepted.
Maybank Kim Eng senior economist Chua Hak Bin said Singapore's labour market recovery might have stalled in the second quarter due to these restrictions.
"Resident employment may have risen further in the second quarter, but may have been offset by a fall in non-resident employment. Sectors more dependent on South Asian workers, such as construction, marine and processing, were probably disproportionately impacted," he added.
"Some of the faster-growing modern service sectors, such as finance and infocommunications, probably saw weaker employment growth in the second quarter," he said.
OCBC Bank's chief economist and head of treasury research Selena Ling feels the impact of the tightened restrictions between May and June will likely be "minor rather than major". She noted that the duration of the curbs was relatively short. The Government also extended wage support schemes to firms affected by the restrictions.
"What may be more of a concern down the road is whether business confidence will normalise further and ramp up capital expenditure and hiring plans," said Ms Ling. There is also the issue of whether such plans "can reabsorb the temporary employment - of swabbers, temperature checkers, social distancing ambassadors and so on - which would subside with time and as vaccination targets are met".