FTCR China Labour Market Index slips as construction drags

by: FT Confidential Research

The FTCR China Labour Market Index slipped in January as a seasonal slowdown hit demand from the construction industry. Manufacturing and service sector demand held up, however, while the headline index was well above the level recorded in January last year. Companies were markedly less positive about the near-term demand outlook, though wage pressures remained significant, despite another fall in our wage index.

• Labour demand was strongest in manufacturing for a second month, although the sector’s sub-index dipped 1.1 points to 60.
• Construction labour demand plunged in January, reflecting a seasonal industry slowdown related to the lunar new year holiday. The sub-index fell 10.4 points month on month to 49.9, its lowest level since last January’s 42.3.
• Demand from the service sector increased at a faster pace than in December. The sector’s sub-index rose 1.3 points to 59.5, just above the 58 average recorded over the previous 12 months. 

• Labour demand grew at a slower pace than in December. Our Labour Demand Index fell 4.1 points month on month to 59.5 but was 14.4 points higher year on year.
• The index was below the average 60.6 recorded over the previous 12 months. 

• Recruitment managers reported that overtime levels increased at a slower pace than in December. 
• Our Overtime Index fell to 51.7 from 54.3 month on month but was 2.2 points higher than in January 2016.

• Hiring managers held a less positive outlook for labour demand in the coming month.
• Our Labour Demand Outlook Index fell 5.9 points month on month to 50.5. This was above the 50-mark separating improvement from deterioration but was also the lowest reading since the series began in June 2012.
• Although the lunar new year may be a factor, there was no similar dip in previous years. 

• Our wage index suggested that the pace at which wages are rising eased in January.
• Our Average Wage Index fell 1.1 points month on month and 3.1 points year on year to 65. This was the third lowest reading since the series began in June 2012. 
• However, the 36.9 per cent of respondents reporting rising wages was the biggest since September, while another 56.2 per cent reported that average wages remained unchanged. 
• The average reported monthly wage for blue-collar workers was up 5.9 per cent month on month and 19.3 per cent year on year at Rmb4,450 ($647).

The FTCR China labour survey comprises interviews with 285 companies across the construction, manufacturing and service sectors. For further details click here. 

This report contains the headline data from the labour survey. The full results, including historical data, are available on our database.