UNEMPLOYMENT will likely fall this year despite a rise in January, the Maybank Investment Banking Group said in a report on Sunday.

The jobless rate forecast for 2024 was kept at 4.0 percent, an improvement from the 4.3 percent seen last year, but Maybank also tagged risks from the impact of the El Niño weather pattern and legislated wage hike proposals.

Unemployment hit 4.5 percent in January, rising from 3.1 percent in December, and underemployment also increased to 13.9 percent from 11.9 percent.

There were nearly 4.6 million fewer jobs during the first month of 2024, with over half or some 2.5 million lost in agriculture.

Employment in this sector, Maybank said in a March 10 report, is expected to "be at risk in [the] coming months due to the El Niño phenomenon between 3Q 2023 and mid-2024 that could adversely affect agricultural production."

It noted that agricultural losses from El Niño had already hit P1.4 billion and that 24 provinces nationwide were potentially at risk from droughts.

Maybank also pointed out that a P100 increase in daily minimum wages had been approved by the Senate.

While the measure still has some way to go before it becomes law, implementation is expected to "push up labor costs by 2.3 percent across all industries...".

Wholesale and retail trade and the repair of motor vehicles and motorcycles, along with agriculture, will experience the biggest impact of 4.1 percent and 4.0 percent, respectively, Maybank said.

"The overall impact would be higher, considering the potential cascading effect from higher wages for those who are only marginally above the current minimum wage level," it added.

Maybank tied its forecast for lower 2024 unemployment to further improvements in the domestic labor market but did not provide details.