Investment-driven growth creating more jobs

The 11-year low jobless rate posted in July was a result of investment-driven economic expansion in the past few years, Japanese financial giant Nomura said Tuesday.

“The unemployment rate fell sharply to 5.4 percent in the three months to July from 6.1 percent in April. On a seasonally adjusted basis, we estimate that it dropped to 5.3 percent from 5.9 percent… This, we believe, reflects not just election-related effects but is a continuation of an unemployment downtrend in recent years due to sustained economic growth which is becoming increasingly investment-led,” Nomura said in a report titled “Philippines: Another sharp drop in unemployment rate.”

The employment rate of 94.6 percent, equivalent to 41 million Filipinos with jobs, was the highest in all July Labor Force Survey rounds since 2011, the National Economic and Development Authority said last week.

The Philippine Statistics Authority also reported that the underemployment rate slid to 17.3 percent in July—the lowest in 11 years—from 21 percent a year ago.

As such, Neda Director-General and Economic Planning Secretary Ernesto M. Pernia said the low unemployment rate in July “increases the likelihood” that the Philippine Development Plan jobless rate target of 6.5-6.7 percent for 2016 would be achieved.

“Employment growth has been broad-based, increasing in the manufacturing and construction sectors, and still holding up in services. This is likely to continue as the government is focused on making growth more inclusive and on accelerating infrastructure spending,” Nomura said.

“These, along with further reforms in the pipeline, should, in our view, help attract more foreign direct investment, it said.

“The fall in the unemployment rate is consistent with our CPI inflation forecast that it moves toward the upper end of the central bank’s 2-4 percent target by next year. We continue to expect the policy rate to increase by 50 basis points in the first half of 2017,” according to Nomura.

As year-to-date inflation remained below the government’s target, the Bangko Sentral ng Pilipinas said it would unlikely tweak policy rates this month.

Since inflation eased to 1.8 percent in August, bringing the eight-month average to 1.5 percent, BSP Governor Amando M. Tetangco Jr. said earlier that “there appears to be no strong need to change policy stance.” Ben O. de Vera