Unemployment falls in October

Labor market conditions are gradually improving.

Per data released by the stats bureau (NBS):

• Youth unemployment (excluding students) in October was 17.1%, down from 17.6% the previous month
• Overall unemployment came in at 5.0%, down 0.1 ppts from September

Youth unemployment has declined for two consecutive months. But as we highlighted in last month’s coverage, this is nothing to shout about:

• Youth joblessness peaks during summer, when college graduates flood the labor market.
• Between September and year-end, the unemployment rate gradually reverts back to the mean.

Overall unemployment has now fallen to its pre-pandemic average.

• Throughout the pandemic, average unemployment ticked up to 5.4%.

Get smart: China’s unemployment rate has remained remarkably resilient given the economic slowdown. There are several reasons for this:

• First, despite sluggish consumption, industrial activity has remained elevated and companies have received policy support to retain staff.
• Second, China’s workforce is aging, meaning that elderly job seekers are dropping out of the workforce. As the jobless give up searching for work, the unemployment rate (which is the number of job seekers as a proportion of the workforce) is artificially lowered.
• Finally, China’s unemployment rate only measures the urban population with a hukou. That means migrant workers and those in rural areas – which experience higher unemployment – are excluded.

Get smarter: Regardless of the statistical limitations of China’s unemployment rate, the labor market is undoubtedly starting to improve.

• Beijing will hope a few more months of strong labor market data will boost consumer confidence.