Nomura lifts 2025 unemployment forecast to 2.4% on slowdown

The bank now expects unemployment to average 2.4% in 2025 (up from 2.0%) and 2.9% in 2026 (up from 2.2%).

Nomura has raised its unemployment forecasts for Singapore, citing weaker-than-expected labour market data in the first quarter and rising global trade uncertainty.

The bank now expects unemployment to average 2.4% in 2025 (up from 2.0%) and 2.9% in 2026 (up from 2.2%).

“We raise our 2025 unemployment rate forecast to 2.4% from 2.0%, taking into account the surprising uptick in Q1 and the weaker hiring outlook for firms,” Nomura economists Euben Paracuelles and Charnon Boonnuch wrote in their Asia Insights report.

The analysts also flagged the potential economic impact of US tariffs, which they said could further weigh on trade-dependent sectors in the second half of the year.

Singapore’s seasonally adjusted unemployment rate increased to 2.1% in Q1, up from 1.9% in the previous quarter — the first rise in four quarters. “This pickup was against our forecast for a stable rate, although it is still below the pre-pandemic level of 2.2%,” the report noted.

Citizen unemployment rose to 3.1%, and resident unemployment inched up to 2.9%.

Job creation fell sharply to 1,300 in Q1, from 6,700 in Q4, driven by a slowdown in “outward-oriented sectors,” including professional services, manufacturing, and information and communications.

The hiring outlook also deteriorated. The Ministry of Manpower’s survey showed that just 40.5% of firms planned to hire over the next three months — the lowest since the survey began in 2020. The proportion of firms intending to raise wages dropped to 21.7% from 31.6%.

Whilst retrenchments remained stable at 3,300, the MOM acknowledged that Q1 developments indicate “a shift in labour market momentum.” Most job losses were tied to business restructuring rather than broad layoffs, according to the ministry.

Despite the softer labour outlook, Nomura held its core inflation forecast for 2025 at 0.9%, citing muted wage pressures and hiring restraint. “Easing labor market conditions and likely lower wage growth” support the view that “underlying inflation pressures will remain subdued throughout 2025.”

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