Overall unemployment still treads lower than job vacancy rates.
Consumer spending in Singapore will see a modest increase in 2017, supported by the expected real wage growth next year.
According to BMI Research, a tight labour market will support real wage growth over 2017 as the current overall unemployment remains lower than job vacancy rates.
"Underpinning our view, we forecast household spending growth to accelerate from 4.5% in 2016 to 6.1% in 2017. The government's efforts to restructure the economy by reducing the flow of foreign labour have resulted in a tighter labour market which has compelled employers to boost wages in order to maintain production- we expect this to persist over 2017," it said.
It noted that unemployment over 2016 has remained low and stabl, reporting a 1.9% rate over 1Q16 before experiencing a slight uptick to 2.1% for 2Q16 and 3Q16.
"We forecast unemployment to remain stable at a rate of 2.2% throughout our forecast period (2016-2020), remaining below the annual average of 2.6% between 2000 and 2014. Wage growth in Singapore has remained on a broadly upward trend over previous years with real wage growth reported at 5.4% for 2015 by the Ministry of Manpower. With that said, uncertain external conditions and domestic economic restructuring will result in uneven labour demand across industries- constraining wage growth in industries facing weak external demand such as manufacturing," the research house explained.
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