South Korea added the most jobs in 10 months in September over a year earlier as companies boosted operations to meet growing demand, data showed on Wednesday, adding to market expectations for an interest rate rise soon. Asia's fourth-largest economy added 71,000 jobs in September over a year earlier, the most since it added 77,000 jobs in November last year, the National Statistical Office data showed.
The unemployment rate fell to a seasonally adjusted 3.6 percent in September from 3.8 percent set in both August and July after peaking at 4.0 percent in June, the data showed. Ananlysts said the robust employment data reinforced the market's view that the economy was sound enough to endure higher interest rates, although chances for a tightening this year have decreased markedly since last Friday.
"The job market has apparently passed its worst point, although the recovery will most likely be gradual," said Park Sang-hyun, economist at HI Investment & Securities. "The job market will no longer be a big obstacle for the Bank of Korea if it wants to raise interest rates."
Last Friday, Bank of Korea Governor Lee Seong-tae dampened expectations for an interest rate increase in 2009, noting signs of moderating property price growth and expressing caution about economic growth later this year. But money market rates, such as the 91-day certificate of deposit rate, suggest investors have already priced in at least a quarter percentage-point increase in the policy interest rate over the next three months.
The Bank of Korea and the government have been publicly at odds over when the country has to begin unwinding unprecedented monetary easing and fiscal stimulus measures introduced since late last year.
The government has cited the still weak job market and sluggish corporate investment in production equipment as the main drags on South Korea's economy despite other figures pointing to its quicker emergence from the global crisis. A high ranking official said this week the government was focusing in particular on employment levels to decide when to implement an exit strategy.
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