Malaysia’s labour market improved slightly to reach 4.5% in September, the lowest level since May 2021. The improvement in the labour market was supported by the reopening of the economy from the restrictive measures imposed in June to contain the virus spread.

And more importantly, the number of own account workers rose faster than the employee’s category. This could mean job creation at the real economic activities is still slow and many are working on their own in the form of micro business. We expect Malaysia's full-year unemployment rate to settle at 4.4% from 4.8% previously as the economy reopens with the labour market continuing to recover.

A. Highlights

• Malaysia’s labour market improved from the severe adverse effects of MCO3.0. The unemployment rate eased to 4.5% in September, the lowest level since May 2021, after logging 4.6% in August.

• The number of employed persons in September 2021 rose by 86.9K to a new record high of 15.46mil persons, while the number of labour force surged by 67.7K, the fastest pace since August 2020, to 16.19mil persons.

• Thus, the employment-to-population ratio rose to 65.5%, from 65.2% in August and the labour force participation rate (LFPR) climbed b to 68.6% from 68.4%.

• It is also worth to note that the number of own account workers increased by 1.38% (August: 1.35%) to 2.57mil compared to the numbers of employees category which increased by 0.24% (August: 0.24%) to 11.92mil persons.

• Looking at specific sector, positive development can be seen in services, constructions and manufacturing sector but downside trend remained in mining.

B. Key Takeaways

• The improvement in the labour market was supported by the reopening of the economy from the restrictive measures imposed in June to contain the virus spread.

• More importantly, the number of own account workers rose faster than the employees category. This could mean job creation at the real economic activities is still slow. Many are working on their own in the form of micro business.

• We expect Malaysia's full-year unemployment rate to settle at 4.4% from 4.8% previously as the economic reopens with the labour market continuing to recover.

Source: AmInvest Research - 10 Nov 2021