ab24 January 2024Global Research and Evidence LabPowered byUBS Evidence LabYESChina 360Survey suggests labour market to improve in Q1; hiring intentions strongest in services UBS Evidence Lab data suggest job market to improve in Q1, led by servicesChina's job market slowed in Q423, based on UBS Evidence Lab's quarterly survey of 204 firms in 77 cities, but breaking down the data by sector reveals a divergence, with a clear rebound in construction. Services looks set to lead the recovery in Q124. Overall, a net 40% of the firms expect to increase hiring on a q/q basis in Q1, up 8ppts on the prior quarter; in services the jump is 20 ppts. Some seasonality might be at play; expectation of further consumption normalization may also be a factor. Macro level data suggest a largely stable labour market with lingering pressures. Construction jobs, wages rebound in Q423Even as the overall share of firms increasing hiring rose in Q4, the share cutting hiring q/q grew by a higher margin. However, the net share of construction firms hiring more on a q/q basis jumped from 24% in Q3 to 41% in Q4, driven by a pick-up in current business orders. By contrast, the net share of manufacturing firms increasing hiring q/q continued to slide (to 10% in Q4 from 21% in Q3). In services, the net share of firms hiring more q/q slowed to 26% from 37% in Q3. Services to drive employment gains in Q124Looking ahead, the hiring outlook is significantly stronger in the service sector with a net 55%, up from 35%, planning to hire more q/q. While hiring demand is marginally better in construction, it is slightly worse in manufacturing. Some 52% of all the firms expect their labour costs to grow q/q this quarter, up from 41% in the prior quarter and 38% in Q422. UBS Greater China consumer team is looking to a recovery in services (which employ 47% of the labour force) to support consumption this year (read more here). Who's hiring and who's not? We spoke to senior managers at two global recruitment firms. Recent demand in South China has been in: 1) industries with technical barriers/in niches (e.g. new materials, optical modules); 2) domestic personal care firms going global; 3) new consumer brands (e.g. tea, coffee). Meanwhile, demand has slowed in hard tech, EV charging & solar sectors. One cross-sector theme appears to be a focus on higher quality talent. Firms are raising the bar for candidates & becoming more targeted in their search; many are also seeking individuals that can help drive industrial upgrading & digitalization projects. Macro level data show stable labour market with lingering pressuresSurvey results seem to be more optimistic about future hiring despite current weakness. On a macro level, while overall unemployment held largely stable in Q4, elevated unemployment rate for young people and soft employment index within...
