November’s unemployment rate remained at 3.2% for the second straight month and is at its 48-month low. Based on the labour market data, private consumption will be the anchor for the economic growth in 2019 and 2020. However, consumer sentiment is sliding based on the Malaysian Institute of Economic Research (MIER) survey which showed a reading of 84 in 3Q2019, the lowest since 4Q2017. Job vacancies are dwindling, easing to an average of 83.7K for the first 10-months in 2019 compared to 92.2K in the period review.

Besides, retrenchment is picking up. The number of people laid off in 2019 is estimated at 37,260 compared to 23,697 in 2018. Expectations of more downsizing and more people seeking opportunities in the informal sector could pick up. Thus, we reiterate the GDP growth for 2019 and 2020 at 4.5% and 4.6% respectively, supported by private consumption, gross fixed capital formation and exports. The unemployment rate in 2020 could reach 3.4%– 3.6% from 3.3% in 2019.

• The November unemployment rate remained at 3.2% for the second consecutive month – marking a 48-month low. The unchanged unemployment number was due to a slight improvement in job creation, up 2.5% y/y in November from 2.2% y/y in October. Also, there was a drop in the number of unemployed, down 0.4% y/y from -0.2% y/y in October.

• Labour force participation edged up slightly to 68.8% from 68.7% in October – the highest since October 2013. Meanwhile, those outside labour force (housewives, students, retirees and those inactively looking for job) grew slowly by 0.3% y/y to 7.17mil people from 1.2% y/y in October to 7.18mil.

• Based on the labour market data, private consumption will be the anchor for the economic growth in 2019 and 2020. However, consumer sentiment is sliding based on the MIER survey which showed a reading of 84 in 3Q2019, the lowest since 4Q2017. Job vacancies are dwindling, easing to an average of 83.7K for the first 10 months in 2019 compared to 92.2K in the period review. Retrenchment is picking up. The number of people laid off in 2019 is estimated at 37,260 compared to 23,697 in 2018. Expectations of more downsizing and more people seeking opportunities in the informal sector could pick up. Thus, we reiterate the GDP growth for 2019 and 2020 at 4.5% and 4.6% respectively, supported by private consumption, gross fixed capital formation and exports. The unemployment rate in 2020 could reach 3.4%–3.6% from 3.3% in 2019.

Source: AmInvest Research - 14 Jan 2020