MANILA - The Philippine unemployment rate declined to 10 percent in July from a record high 17.7 percent in April. The number of unemployed also went down to 4.6 million from 7.3 million, government data released Thursday showed.

But year on year the employment numbers are worse.

The unemployment rate in July of 10 percent was close to double the unemployment rate of July 2019. The number of unemployed also nearly doubled to 4.6 million from 2.4 million the year before.

The year on year data is a good comparison, as it takes into consideration seasonal factors, such as the presence of fresh graduates in the workforce.

This chart shows unemployment (in blue) and underemployment (in orange) through the years up to 2005, when the definition of unemployment was adjusted.

The July unemployment rate of 10 percent is not as bad as April, but it is still much worse compared to the historical trend. Underemployment, which measures workers with jobs who are still looking for additional employment and income, looks less severe when compared to the historical trend.

The National Capital Region had the worst unemployment rate for the period, at 15.8 percent, much higher compared to the national average of 10 percent. That translates to nearly 1 million (929,000) unemployed Filipinos in the NCR alone, about one fifth of the total unemployed in the Philippines.

The NCR was the only region to see its unemployment rate go up from April, when it was only at 12.3 percent. Worse, key economic hubs including CALABARZON (Region IV-A), Central Luzon (Region III), and Central Visayas (Region VII) still suffered from double digit unemployment rates. These regions are the largest economic hubs in the Philippines. High unemployment here will greatly affect their contribution to economic activity in the third quarter.

Looking at employment by sector, services continued to be the biggest employer with a total of 22.7 million workers in the sector. This is a 3.4 million worker improvement from April, but a decline of 2 million workers year on year.

Industry and Agriculture also improved compared to their April levels, but only Agriculture managed to improve employment year on year. Agriculture employed 1.2 million more workers in July 2020 compared to July 2019.

The top 5 major occupations with the largest drop in employment were again led by Arts, Entertainment and Recreation and Accommodation and Food Service Activities. These continue to be the sectors worst hit by COVID-19 lockdowns which prohibit mass gatherings.

A surprising hit was Information and Communication. It had a drop of 28.8 percent despite the sector increasing in importance as more businesses turn to e-commerce and work from home set ups to prevent COVID-19 transmission.

Major occupations that managed to increase employment were led by Mining and Quarrying and Agriculture and Forestry. Mining benefited by the rush into safe haven investments such as gold and precious metals.

Unfortunately it is only a small contributor to employment and gross domestic product. It employed 243 thousand in July 2020.

Agriculture meanwhile was the only sector which was able to register positive growth in the second quarter, even as the services and industry sectors contracted. Wholesale and Retail Trade and Construction meanwhile also managed to grow their workforce. Traders employed 8.9 million in July, while Construction employed over 4 million.

A key issue in the April jobs data was labor force participation. The April 2020 labor force participation rate was a record low of 55.6 percent. This means a huge portion of the population had actually given up on looking for work.

In July however, the labor force participation improved to 61.9 percent. This is still lower year on year, but the improvement from April means there are more people who at least hope they can find new work. The increase in participation rate translates to 900 thousand more Filipinos in the Labor Force.

This chart shows just how big the recovery was from July to April. Economic managers attribute the rebound to the easing of quarantine conditions across the Philippines.

Meanwhile youth (15 to 24 years old) not in education, employment or training also improved. The Youth NEET rate fell to 11.4 percent in July 2020, from 25.3 percent in April 2020, and 18.8 percent in July 2019.

That means only 2.3 million youths were not in education, employment or training in July. That is a 1.5 million improvement year on year, and less than half the 5.1 million NEET youths recorded in April 2020.

That is more impressive considering the number of Youths in the labor force actually increased to 7.8 million in July 2020, from 6.5 milion in April 2020, and 7.6 milion in July 2019.

However, there are still 1.8 million unemployed youths as of July 2020, that’s an unemployment rate of 22.4 percent, more than double the national average rate.

But the unemployment data is still worse year on year. Key business and employment centers also suffered from the highest levels of unemployment in the Philippines. The biggest hindrance to work was COVID-19 and various levels of community quarantine.

"Better than expected. This means “only” 1.4 million fewer employed Filipinos compared to January. Surprising considering retail, tourism, hospitality, construction, transport are all still at a fraction of pre-pandemic operating levels," said Abacus Securities and My Trade head of research Nicky Franco.

Overall the general reaction to the July employment data is that of relief. The data suggests April, and the second quarter, is indeed shaping up to be the bottom of the COVID-19 induced recession of the Philippines, as promised by Economic Managers.

But there are still many challenges ahead, and it is unclear how the fight against COVID-19 will progress.

The third quarter was already hit with returns to tighter quarantine conditions in key economic hubs including NCR.

The latest data also does not include the impact of the non-renewal of ABS-CBN’s franchise by the House of Representatives. About half of the 11,000 ABS-CBN employees were retrenched across the Philippines, and businesses that rely on ABS-CBN as a customer have also shuttered or slowed down.

The next labor force survey will be conducted in October, and released in December.