Our economists have turned more bearish on employment prospects in 2012, though still unlikely to re-test the 2009 lows (+38k new jobs vs. 228k in 2008).

During the Global Financial Crisis, the government came in to plug employment (Job Credit Scheme) when manufacturing jobs dived and services jobs went to zero. We can expect similar initiatives if crisis strikes again.

Our economists are maintaining their 2011 new jobs forecast of 95-100k and year-end unemployment rate of 2.0% SA, having already trimmed our estimates earlier. But for 2012, they now expect the economy to add net jobs of 60-65k, down from an already reduced estimate of 80-95k jobs previously.

In Singapore, manufacturing has not been adding jobs in the last two years, so there is less to cut. Services jobs are most at risk which could have a more profound impact on housing and office space demand. Our lowered estimates assumes slower job gains in the services sector of around 50k (112k in 2006-2010), and end year unemployment of 2.3% SA on labour force growth of 2%. Possible factors that could cushion the blow include 1) new hotels still opening up and 2) more muted job cuts in Finance, vs. the western world. For example, UBS’s planned 3,500 job cuts globally see Asia contribute to only 10%.