We expect softness in Singapore’s and China’s economies to flow to the labour market. This translates to lower placements, a key revenue driver for HRnetGroup (SGX:CHZ).
A sputtering recovery in China is affecting business confidence and hiring sentiment.
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In general, China’s economic recovery came in below the market’s expectations and the growth reflected in the figures are largely a result of base effects and to a certain extent pent up demand. Confidence in the Chinese economy is weak, making it more challenging for recruitment firms such as HRnetGroup to build business pipelines.
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Easing labour market in Singapore could cool demand for job placements on the back of a cloudy outlook.
Though the Singapore labour market continued to expand with total employment increasing in the sixth consecutive quarter, it may continue to lose steam due to a weaker and more uncertain macroeconomic environment. The quarterly changes in employment have also eased from 83,400 in 3Q22 to 38,600 in 1Q23, albeit still positive in the last six quarters.
Similarly, job vacancies are still elevated at 97,400 in 1Q23 compared to pre-COVID level of 54,700 in 1Q19. However, that fell from the high in 2Q22, pointing to a cooling labour market.
Our economist has lowered Singapore’s full year GDP forecast from 2.2% to 1.7% on a tough economic climate and we are of the view that job placement demands could start to come down on macroeconomic uncertainties, continued inflationary pressures, and rising risks of a recession.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
