PH job market set to wobble as hiring demand fades
The US tariff storm is shaking business confidence in the Philippines and threatening to sap hiring. This is a blow that could further weaken the local job market, according to Pantheon Macroeconomics.
In a note to clients, the London-based think tank said the unexpected spike in unemployment in July—officially blamed on weather disruptions—may signal “a potentially significant deviation and trend change” from the steadier labor conditions since early 2024.
The jobless rate, it noted, had held below 4 percent for the past 18 months. But in July, the rate went up to a three-year high of 5.3 percent. This was after heavy rains swamped farms and paralyzed roads.
Pantheon, however, stopped short of sounding the alarm.
The firm conceded that local officials may be right in blaming July’s unemployment spike on intense downpours. Still, it warned of more trouble ahead if other gauges—particularly the Bangko Sentral ng Pilipinas’ (BSP) latest business confidence survey—are any guide.
“The job market is likely to wobble in the weeks and months ahead, even if, in the August report, the unemployment rate falls back down to within its previous range,” wrote Miguel Chanco, an economist at Pantheon.
“Crucially, corporate labor demand continues to fade, based on the most recent Business Expectations Survey from the BSP,” Chanco added.
That central bank survey showed business sentiment dimming in the second quarter and in the months that followed. This, as US trade tensions clouded export prospects and cast a shadow on the broader economy.
The poll also revealed a slide in companies’ employment outlook for both the third quarter and the next 12 months. This suggested that firms may still add workers, but with far less enthusiasm than before.
The labor force participation rate fell to 60.7 percent in July from 65.7 percent in June. This rate describes the proportion of the working-age population and those that have jobs or don’t but are actively looking.
The underemployment rate—which tracks the share of employed individuals seeking additional hours or income—rose to 14.8 percent, the highest in two years or since July 2023’s 15.9 percent.
“The Philippines’ labor market was dealt a sucker punch at the start of the third quarter,” Chanco said.
