China’s complicated employment picture amid an economic slowdown and US trade war

Officially, China’s unemployment situation improved in December with the unemployment rate dropping to 4.9 per cent compared to 5 per cent a year earlier

But the employment situation tracked by the official purchasing manager’ index has actually worsened since last year, indicating a lower demand for new hires

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Published: 9:01am, 1 Mar 2019Updated: 9:56am, 1 Mar 2019

The exact health of China’s labour market can be confusing at the best of times, but with the country struggling against an economic downturn and a trade war with the United States, current unemployment and employment figures are only making the picture murkier and harder to gauge.

Officially, China’s unemployment situation improved in December with the unemployment rate dropping to 4.9 per cent compared to 5 per cent a year earlier.

At the same time, the employment situation tracked by the official purchasing managers’ index (PMI) has actually worsened since last year, indicating a lower demand for new hires.

Both the official manufacturing and non-manufacturing PMI released on Thursday showed firms continued to cut their employment levels in February, according to the National Bureau of Statistics (NBS).

And on Baidu, the most popular search engine in China, searches for the word “lay-off” jumped threefold in the week after the Lunar New Year holiday compared to the same period last year, which is traditionally a high season for new hires.

One explanation for the lower unemployment rate that appears to contradict fears of rising lay-offs is the decline in the size of the labour force, which may be offsetting the impact of lower employment resulting from the economic slowdown.

China’s working age population – adults aged 16 to 59 – stopped increasing in 2012 and has fallen steadily since, and last year, shrank by another 4.7 million to 897 million, according to the NBS.