Malaysia

Unemployment rate steady in August

Malaysia’s unemployment rate in August remained the same as in July's, reading at 4.7%. This was partly due to more jobs being created, at 80K in August. While the unemployment trend may have appeared to stabilize, the downside risk remains in the near term. Should the second wave of Covid-19 turn more severe, the risk of unemployment scaling up is high. While our base case shows the unemployment rate should hover around 4.7%–4.9%, the worst-case scenario could see 6%–8%.

• Malaysia’s unemployment rate in August remained changed, reading at 4.7%, which is the same as July's. The steady rate of unemployment during the month was partly due to a lower increase in the number of unemployed i.e. by 3.5K persons to 741.6K (July 745.1K). Besides, there were more jobs created in August, coming in at 80.1K (83.2K in July). Hence, for the first 8 months of the year, the total number of unemployed and employed stood at 5.5 million and 120.9 million respectively.
• A key point to note is those “outside labour force” – people who are classified as housewives, students, (including those going for further studies), retired, disabled persons and those not interested to look for jobs. The number has fallen for the first time since January 2020. August data shows a drop of 48.3K to 7.35 million people (7.40 million in July).
• Another key point to note is that the number of employed persons who were temporarily not working continued to fall to 102K in August from 104.3K in July, or a reduction of 2.3K persons. Youth unemployment rate (age 15 to 30 years) eased to 8.9% from 9.7% in July Meanwhile, those under the own-account workers rose to 2.42 million in August from 2.38 million in July. This shift could mean that there could be an increasing trend of self-employment.
• While the unemployment trend may have appeared to stabilize, the downside risk remains in the near term. Should the second wave of Covid-19 turn more severe, the risk of unemployment scaling up is high. While our base case shows the unemployment rate should hover around 4.7%–4.9%, the worst-case scenario could see 6%–8%.

Source: AmInvest Research - 14 Oct 2020