Fewer firms intending to raise wages signals loosening labour market

Companies planning wage hikes dropped to 15.6% from 28.6%.

The decrease in firms planning to raise wages may suggest a "less tight" labor market, likely due to an increase in labor supply, Nomura said.

According to the latest survey by the Ministry of Manpower (MOM), the proportion of companies intending to raise wages fell significantly to 15.6% in Q3 from 28.6% in Q2. This drop comes even as demand remains strong and despite a positive growth outlook.

Preliminary MOM report showed that total employment grew to 24,100 in Q3, up from 11,300 in Q2, whilst retrenchments decreased from 3,300 to 2,900.

Consequently, the unemployment rate fell from 2.0% to 1.8%.

Nomura suggests these developments may support the Monetary Authority of Singapore's (MAS) recent assessment that unit labor costs will rise more gradually.

It also noted that wage growth—which tends to lead core-core inflation by a quarter—may ease further, contributing to reduced wage pass-through to core inflation, despite the temporary rise in September due to specific price adjustments.