Malaysia: Labour market remains strong – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the recently published labour market report in Malaysia.

Key Takeaways

“Malaysia’s labour market recovery gained further traction in Jul with both employment and the size of labour force breaching new record levels. This helped bring the national unemployment rate lower for 12 months in a row to 3.7% in Jul (from 3.8% in Jun), moving closer to the pre-pandemic jobless rate of 3.3%.”

“The gain in total employment was primarily driven by persistent hiring in services (particularly food & beverages services, wholesale & retail trade, and administrative & support services activities), manufacturing (i.e. E&E, other plastic products, and refined petroleum products), and the construction sectors, which fully offset the decline in the agriculture and mining & quarrying sectors. The employment-to-population ratio, which indicates the ability of an economy to create employment, accelerated to 67.0% from 66.9% in Jun, above pre-pandemic levels for three straight months.”

“Despite lingering headwinds on the horizon, we think that the country’s transition to endemicity with a full reopening of economic and social activities as well as borders would continue to drive the labour market recovery for the rest of the year and into 2023. The government is also expected to unveil some positive measures to boost investment and employment in the coming Budget 2023 on 7 Oct. We tweak our year-end unemployment rate projections lower to 3.5% for this year (from 3.6% previously, BNM est: average ~4.0%) and 3.2% for 2023 (from 3.5% previously).”