Financial giant Nomura raises 2025 unemployment forecast to 2.4%

SINGAPORE: Nomura has raised its forecast for Singapore’s unemployment rate in 2025 to an average of 2.4%, up from its earlier estimate of 2.0%. The financial services group also lifted its 2026 forecast to 2.9%, from 2.2% previously, Singapore Business Review reported.

In their Asia Insights report, economists Euben Paracuelles and Charnon Boonnuch said the group raised its 2025 unemployment rate forecast due to the “surprising uptick” of unemployment in the first quarter (Q1) and the weaker hiring outlook for firms.

Analysts also pointed out that the potential economic impact of US tariffs could add more pressure on trade-dependent sectors in the second half of the year.

Last week, the Ministry of Manpower (MOM) announced that employment growth in the city-state slipped in Q1, with only 2,300 more people hired. This was lower than the 7,700 jobs created in the last quarter of 2024 (Q4 2024) and below the 3,200 growth during the first quarter of last year (Q1 2024).

MOM cited that the slowdown was more evident in “outward-oriented sectors”, including professional services, manufacturing, and information and communications.

Citizen unemployment climbed to 3.1%, while resident unemployment edged up to 2.9%.

The hiring outlook also weakened, with MOM data showing that only 40.5% of employers are planning to hire in the next three months, the lowest since the survey started in 2020. Fewer firms also expected to raise wages, falling to 21.7% from 31.6%.

Retrenchments fell to 3,300 from 3,680 in the previous quarter,​ with MOM acknowledging that there is “a shift in labour market momentum” in Q1. According to the ministry, retrenchments were mainly due to business reorganisation or restructuring.

Despite the softer labour outlook, Nomura kept its 2025 core inflation forecast at 0.9%, pointing to muted wage pressures and hiring restraint. The group said easing labour market conditions and likely slower wage growth suggest that “underlying inflation pressures will remain subdued throughout 2025.”

Callam Pickering, APAC senior economist at Indeed, recently said that ongoing geopolitical and economic uncertainty could affect job creation in Singapore for the rest of 2025. /TISG 

Read also: Malaysia’s unemployment rate drops in January 2025

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