Nobody ever pays attention to the unemployment rate figures published by Chinese officials as they hardly ever change, regardless of the economic situation.
However, the current economic slowdown has probably increased unemployment. For instance, we have anecdotes of migrant workers in coastal cities returning home as factories close down and construction activity slows.
The chart below shows the employment component of yesterday’s official PMI by year. As you can see, this July is the first month on record where the employment component dipped below 50. And indeed, this component tends to increase slightly in July:
The following chart is even more interesting. This shows the employment component of the official and HSBC/Markit PMI.
There are a few interesting observations here. First of all, there was a big dip in the official PMI towards the end of last year and beginning of this year, which is mainly down to seasonality (Chinese New Year). The second, and perhaps the most important one, is the recent divergence of the employment components comes from a different source. While the HSBC/Markit PMI’s employment component is hitting 40-month low, the official one is holding up relatively well. This could be down to the fact that the official PMI has more weight on larger enterprises, which are probably weathering the slowdown relatively better than small and medium sized companies.