South Korea's job growth rebounds in June, but manufacturing and construction sectors face prolonged decline

South Korea's employment figures showed a positive turn in June, with a gain of 63,000 jobs compared to the same month last year. This rebound follows a slight decrease in May, suggesting a recovery in the labor market, partly attributed to the easing impact of the Middle East conflict and a revival in consumer sentiment, particularly in the accommodation and food service sectors.

Despite the overall increase, the nation's core employment drivers, manufacturing and construction, are facing persistent challenges. The manufacturing sector has seen job losses for 24 consecutive months, while the construction industry has experienced a decline for 26 months. These prolonged downturns signal a deepening structural issue within these critical industries.

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The Middle East war impact is showing signs of easing, and consumer sentiment is reviving, leading to increased employment in sectors like accommodation and food services.

Experts point to a combination of factors contributing to the manufacturing slump, including automation, increased overseas investment, and the impact of the Middle East conflict on sectors like steel and petrochemicals. A fire at an automotive parts manufacturer in March also negatively affected production and employment. The share of manufacturing in total employment has slightly decreased over the past year.

Similarly, the construction sector's prolonged downturn is linked to rising costs since the COVID-19 pandemic and difficulties with real estate project financing. The government has acknowledged the severity of the situation and plans to establish a task force to analyze the factors behind the job stagnation in manufacturing and construction and formulate appropriate response strategies.

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Manufacturing automation and increased external investment have been structural factors behind the sluggish manufacturing employment in recent years, and the war's impact has also led to adjustments in the steel and petrochemical industries.