UPDATE 1-Singapore employment sinks in Q2, drop worst since 2003

* Preliminary unemployment rate stays at 3.3 pct s/adj in Q2

* Q2 employment contraction double from Q1, worst since 2003

SINGAPORE, July 31 - Singapore's overall unemployment rate stood at 3.3 percent in the second quarter, unchanged from the previous period, government preliminary data showed on Friday.

But the number of people employed fell by 12,400 in April-June, twice as much as in the first quarter, as many foreign workers who had lost jobs returned home, shrinking the workforce pool.

"Given that employment is a lagging indicator, the extreme weakness in the economy around the turn of the year is yet to pass through to the numbers," said HSBC economist Prakriti Sofat.

"As such we look for the unemployment rate to continue to tick up with the peak of around 4 percent at the end of the year." S/ADJ 2Q09 1Q09 4Q08 3Q08 2Q08 Overall %* 3.3 3.3 2.5 2.3 2.2 Residents %** 4.6 4.8 3.6 3.4 3.1 TOTAL EMPLOYMENT (change in 1,000) -12.4 -6.2 21.3 55.7 71.4 Manufacturing -17.6 -22.1 -7.0 4.6 10.1 Construction 3.4 8.3 10.7 16.5 22.4 Services 2.1 7.5 17.3 34.3 38.3 NOTE: * Overall includes foreign workers

** Residents include Singaporeans and permanent residents

CONTEXT

- Singapore's unemployment figure rose to a seasonally adjusted 3.3 percent in the first quarter of 2009, the highest in three years.

- In the first quarter, the resident unemployment rate, which measures the number of Singaporeans and permanent residents looking for work, stood at a five-year high of 4.8 percent, up from 3.6 percent in December.

- Trade-dependent Singapore leapt out of its worst recession and upgraded its economic outlook due to rising drugs production and construction, though analysts said it was too early for the central bank to end its accommodative policy.

- The government revised up this month its 2009 forecast for the economy to a contraction of 4 to 6 percent from a contraction of up to 9 percent, and analysts said China and other Asian exporters were also likely to report improved second-quarter growth.