South Korea’s labor market showed signs of cooling in May as employment growth slowed to its slowest pace in more than three years, a weak outcome that may support the case for authorities to consider adjusting policy.

The number of new jobs increased by 80,000 in May, compared with 261,000 a month earlier, according to data released Wednesday by the South Korean government. That’s the smallest rise since early 2021 when the economy was struggling to emerge from the grip of the coronavirus pandemic.

The weakening momentum in job creation contrasts with a faster-than-expected pickup in economic growth as exports rally on the back of global demand for semiconductors and other technology-heavy products the country produces. Those sectors tend to hire fewer people than service industries that account for the lion’s share of the labor market.

The unemployment rate remained unchanged at a still low 2.8%, also suggesting that the government and central bank need to keep monitoring the job market to gauge whether the weak result points to a turning point or a blip.

The jobs report comes as the Bank of Korea considers the timing of a policy pivot after holding its benchmark interest rate at 3.5% since the beginning of 2023, a level it characterizes as restrictive.

Written by:  @Bloomberg