Philippine Markets Newsletter

MONDAY MACRO: This improving indicator might be a concern at the start of 2022, but it likely won’t take long to return to pre-pandemic levels

January 24, 2022

This indicator showed improvements near the end of 2021. However, due to another spike in COVID cases this month, it seems it may revert back to unfavorable numbers.

Today, we’ll see whether or not investors should worry about the Omicron variant’s impact on the Philippine unemployment rate.

Philippine Markets Newsletter:
The Monday Macro Report
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When an economic downturn takes place, companies normally face higher costs, declining revenues, and difficulty in paying off debt. In order to survive, some businesses are forced to cut down costs, which usually results in layoffs.

The Philippine unemployment rate has been generally decreasing, from around 12% in the early 2000s to as low as 4%-5% levels by 2019. That said, the pandemic caused the unemployment rate to peak at 18% and remained at elevated levels.

As businesses struggled with the pandemic, many were forced to let employees go. This had a disproportionate impact on the lower class as the group relies more on their salary.

We see this from the increase in the poverty incidence rate, which goes hand in hand with spikes in the unemployment rate.

According to the Philippine Statistics Authority’s (PSA) three-year survey, poverty incidence among the Philippine population rose to 23.7% in H1 2021 compared to just 21.1% in H1 2018. In other words, 26 million Filipinos continue to live under the poverty threshold.

Furthermore, a rising unemployment rate also necessitates higher government spending dedicated to social welfare, specifically for unemployment assistance programs sourced from the Social Security System (SSS) and Government Service Insurance System (GSIS).

Fortunately, unemployment is now at its lowest since March 2020, recording 6.5% in November 2021. As vaccinations progress, the country has been able to come out of a recession in 2021.

The latest number implies more citizens are now able to recover financially since more businesses have opened up. Personal consumption by Filipinos will likely increase and thus boost the country’s growth.

That said, we should keep in mind that the unemployment rate is a lagging indicator of the economy, since the latest data is still from last November.

Based on recent events, we know the government has been alarmed by the recent surge in COVID cases. However, instead of implementing massive lockdown measures, they have limited restrictions to problematic areas. That’s a good sign we won’t see a repeat of March 2020.

Given this, investors should anticipate any uptick in the unemployment rate and the like to only be temporary. The Philippines is poised to be in a better position this year compared to 2020 and 2021.

Therefore, any market sell-offs in reaction to this should be seen as a buying opportunity.

About the Philippine Markets Newsletter
“The Monday Macro Report”

When just about anyone can post just about anything online, it gets increasingly difficult for an individual investor to sift through the plethora of information available.

Investors need a tool that will help them cut through any biased or misleading information and dive straight into reliable and useful data.

Every Monday, we publish an interesting chart on the Philippine economy and stock market. We highlight data that investors would normally look at, but through the lens of Uniform Accounting, a powerful tool that gets investors closer to understanding the economic reality of firms.

Understanding what kind of market we are in, what leading indicators we should be looking at, and what market expectations are, will make investing a less monumental task than finding a needle in a haystack.

Hope you’ve found this week’s macro chart interesting and insightful.

Stay tuned for next week’s Monday Macro report!


Angelica Lim
Research Director
Philippine Markets Newsletter
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