China’s Not Hiring; the number of new jobs advertised on leading recruitment website Zhaopin.com fell sharply by 22% in April, the steepest decline since Zhaopin started collecting data in 2010

May 24, 2013 Leave a comment

May 22, 2013, 11:29 p.m. ET

China’s Not Hiring

By TOM ORLIK

China’s labor market has been a bright spot amid economic gloom. Strong jobs data over the past year has helped offset concerns about slowing growth. But there are signs employment is beginning to weaken too. The official job numbers in China are irregular and, in some cases, inaccurate. But other sources of data fill in the blanks. For instance, the number of new jobs advertised on leading recruitment website Zhaopin.com fell sharply in April. With the first quarter peak hiring season, some falling off in April is expected. But a 22% drop in new job postings from the previous month was the steepest decline since Zhaopin started collecting data in 2010. Business surveys suggest the downturn is broad-based across manufacturing and services too. The preliminary reading for the HSBC HSBA.LN -3.23% China Manufacturing Purchasing Managers’ Index in May showed factories trimming their workforce for a second month. Worryingly, the HSBC Markit services PMI also points to job losses. If labor markets are turning down, they are at least doing so from a position of strength. China’s private sector wages rose 14% in real terms in 2012 according the National Bureau of Statistics. Demand for workers outstripped supply by a record amount in the first quarter. The drop in new job adverts on Zhaopin came after a record high in March.Demographic shifts means there is less need to create jobs. China’s workforce is aging and shrinking. But strong labor markets are still critically important for Beijing. Low unemployment and rising wages are the basis of social stability. Strong employment is also a crucial precondition for rebalancing the economy so that households are a bigger driver of growth. Data released by the National Bureau of Statistics this week showed that process has stalled, with the private consumption share of gross domestic product flat at 35.7% in 2012.

For now, the job indicators are flashing amber rather than red. Premier Li Keqiang has signaled that there is little scope for a stimulus. But if hiring continues to deteriorate, leaders will find it difficult to turn off the lending taps.

Filed under Macro Trends

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