South Korea unemployment rate hits 3-1/2-year high amid political uncertainty By Reuters

By Jihoon Lee

SEOUL (Reuters) – South Korea’s unemployment rate jumped to a 3-1/2-year high in December as political turmoil fueled economic uncertainty and dampened sentiment, the data showed on Wednesday, a day before the first monetary policy meeting of the central bank of the year.

The unemployment rate last month rose to 3.7% on a seasonal basis, the highest since June 2021 and a sharp increase from 2.7% in November, according to Statistics Korea.

The number of people employed fell by 52,000 in the 12 months to December, after a gain of 123,000 in November. It was the first fall since February 2021.

The Ministry of Finance said after the release of data that the labor market slowed down as consumer sentiment weakened due to political uncertainty, while also citing the temporary effects of the projects of the ‘terminated government jobs.

Last month, consumer confidence fell to the lowest level since the end of 2022, while business sentiment hit its weakest in more than four years, hurt by an unprecedented constitutional crisis triggered by a short-lived martial law order by President Yoon Suk Yeol on December 3.

“Although employment is not a policy mandate for the Bank of Korea, it will inevitably affect the central bank’s monetary policy, as it still represents the economic cycle as a final indicator,” said Park Sang-hyun , economist at iM Securities.

The Bank of Korea is expected to cut interest rates by 25 basis points for the third straight meeting on Thursday, a month earlier than expected, although a weak local currency may be a headache for policymakers politicians