SEOUL: South Korea’s jobless rate jumped to the highest in 3-1/2 years in December, as political turmoil stoked economic uncertainty and dampened sentiment, data showed on Wednesday, a day ahead of the central bank’s first monetary policy meeting of the year.
The unemployment rate last month rose to 3.7% on a seasonally adjusted basis, the highest since June 2021 and sharply up from 2.7% in November, according to Statistics Korea.
The number of employed people fell by 52,000 over the 12 months to December, after a gain of 123,000 in November. It was the first fall since February 2021.
The finance ministry said after the data release that the labour market slowed as consumer sentiment weakened on political uncertainty, while it also cited temporary effects of terminated government employment projects.
Last month, consumer confidence slumped to the lowest level since late 2022 while business sentiment hit the weakest in more than four years, hurt by an unprecedented constitutional crisis triggered by a short-lived martial law order by President Yoon Suk Yeol on Dec. 3.
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“Although employment is not a policy mandate for the Bank of Korea, it will inevitably affect the central bank’s monetary policy as it still represents the economic cycle as a trailing indicator,” said Park Sang-hyun, an economist at iM Securities.
The Bank of Korea is expected to lower interest rates by 25 basis points for the third straight meeting on Thursday, a month earlier than previously anticipated although a weak local currency will likely pose a headache to policymakers.
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