Economic growth prospects remain bright as the government’s spending on infrastructure projects will offset any possible slowdown in employment in the first quarter, private sector economists said Tuesday.
Economists from First Metro Investment Corp. and the University of Asia and the Pacific said in a joint report the unemployment rate inched up slightly to 4.3 percent in December 2022 from 4.2 percent in November.
They said firms relied on more hours of input from workers in December from the previous month and employed less people by 707,000.
“The slowdown should continue in January although the resumption of infrastructure spending in 2023 would provide a buffer,” they said.
Data showed that the purchasing managers index reached a seven-month high of 53.5 in January. The improvement from 53.1 in December suggested no letup in the key subsector and boosted business confidence, they said.
PMI is a measure of the prevailing direction of economic trends in manufacturing. It is based on a monthly survey of supply chain managers across 19 industries, covering both upstream and downstream activity.
“Despite the usual easing of employment levels in December, the economy still looks sufficiently robust to weather the global headwinds,” they said.
“The economy still showed signs of resilience despite the weakened global economic outlook. Employment may ease in first quarter slightly but should recover as NG [national government] ramps up infrastructure spending with the early approval of its budget and the manufacturing sub-sector emitting positive signals in January 2023,” they said.
The 4.3 percent jobless rate in December was lower than 6.6 percent a year ago. Unemployment rate averaged 5.4 percent in 2022, near the pre-pandemic level of 5.1 percent in 2019. It also eased from 7.8 percent in 2021 and 10.4 percent in 2020.
FMIC and UA&P economists predicted that inflation—one of the persistent threats to economic growth— would likely remain elevated and average 8.1 percent in the first quarter this year.
Fitch Solutions, a unit of Fitch Group, said in a report Monday, the Philippine economy was poised to underperform in 2023 from a 46-year high of 7.6 percent in 2022 because of the combined effects of elevated inflation, sluggish global demand and higher interest rates.
Fitch Solutions said in a report that while the economy expanded by a strong 7.2 percent in the fourth quarter, this pace might not be sustainable.
Fitch Solutions said, however, the pace of growth in the Philippines would still be strong compared to the standards of most economies.