South Korea adds more jobs before new Covid-19 outbreaks force Seoul curbs

SEOUL (BLOOMBERG) – South Korea added jobs for a fourth straight month in June, as a recovering economy kept the momentum alive in employment before new Covid-19 outbreaks triggered Seoul’s toughest restrictions yet.

Employment rose by 582,000 from a year earlier, the statistics office said Wednesday (July 14). The jobless rate inched down to 3.7 per cent, compared with the median estimate of 3.8 per cent by economists.

The jobs recovery faces another setback, though, as authorities ramp up restrictions from this week to curb a spike in infections. Korea’s economy has powered ahead this year on the back of strong exports and investment, but the prospect of a prolonged outbreak is now a key risk to the outlook, as the country muddles through a pandemic that causes more infections as activity increases.

The latest rules, which ban gatherings of three or more people after 6pm and order some entertainment venues to close, are a blow to a service sector that was emerging from a yearlong slump. A government budget proposal now under consideration would offer some support to small business owners who have borne the brunt of the virus restrictions.

The outlook for jobs will likely feature significantly in the Bank of Korea’s discussions when the board meets Thursday. Governor Lee Ju-yeol has repeatedly signaled the bank is keen to start raising rates this year as financial risks build, but the timing and pace of any tightening would depend on how the virus situation evolves.

“The worsening outbreaks are likely to impact the jobs market and also make it more likely now for the BOK to raise rates once, rather than twice this year,” said Park Sung-woo, fixed-income analyst at DB Financial Investment.

The health and social welfare sector led gains in employment with 208,000 positions added in June. The construction industry gained 140,000 jobs, while 87,000 workers were added in public service, defense and social security.

The data showed the retail and wholesale sectors continued to be hard hit, shedding 164,000 positions. Manufacturing lost 10,000 jobs.

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