• Unemployment rate increased to 3.5%
• The number of unemployed persons went up 0.5% yoy to 520,000
• Employment increased by 2.0% to 14,497,000 • Labor force rose 2.0% to 15,016,00
• Labor force participation rate decreased marginally to 67.7%%
• Labor market supported by robust manufacturing and external sector

Malaysia's unemployment rate rose slightly in July. The unemployment rate inched up to 3.5% in July from 3.4% posted in June. Meanwhile, In the corresponding month last year, unemployment rate was steady at 3.5% yoy (July 2016: 3.5%). On a seasonally adjusted monthly basis, the unemployment rate in July 2017 also edged up to 3.5%, an increase of 0.1 percentage points compared to the previous month.

The labor force participation rate decreased marginally to 67.7% in July as compared to the preceding month (67.8%). The number of unemployed persons grew 0.5% from a year earlier to 520,000. Employment increased by 2.0% to 14,497,0

Labor market supported by robust manufacturing and external sector

The country’s economy is still operating in full employment, i.e. unemployment rate below 4.0%. Strong export performances since late last year has contributed significantly towards strengthening Malaysia’s labor market. Export growth in July for instance, rose 30.9% yoy in, underpinned by higher exports of manufactured products. Exports of manufactured goods for July 2017 rose by 32.6% yoy, led by higher exports of all products in the manufacturing sector. Domestically, retail trade registered a new record with growth momentum stood at 14.1% yoy while output from the industrial sector surged by 6.1% yoy in July. Soaring export demand helped industrial output to grow at its fastest rate of the year in July, making it the fastest recorded since November 2016. The gain exceeded annual average increases of 4.3% in the first and second quarters of this year and points to a strengthening of economic activity at the start of the third quarter. Within the manufacturing sector, the bellwether E&E sector surged by 10.5% yoy in July. Manufacturers added more workers for the month as reflected in the hiring of workers where total employees engaged in the manufacturing sector in July 2017 increased 2.9% yoy, the fastest ever recorded while wage growth of manufacturing sector expanded solidly by 11.3%yoy. We believe the strong performance in external trade translates into better sales, employment and most importantly improvement in domestic spending.

Moving forward, we anticipate domestic as well as global economic activities will stay on upward trajectory. Global trade is expected to improve further this year and Malaysia as an export-reliance economy will benefit from the development via increase in exports demand and more jobs creation in the exports-oriented industries.

Source: BIMB Securities Research - 19 Sept 2017