• Unemployment rate edged up to 3.4%

• The number of unemployed persons increased 0.5% yoy to 517,000

• Employment rose 2.1% to 14,671,000

• Labor force grew by 2.1% to 15,187,00

• Labor force participation rate increased marginally to 68.2%

• Stable unemployment rate for the year

The unemployment rate for January 2018 increased 0.1 percentage point to 3.4% from 3.3% in December. Meanwhile, year-on-year comparison, unemployment rate was 0.1 percentage point lower than January 2017. The number of unemployed increased by 0.5% yoy to 516,500 in January from 505,800 in the previous month. A year ago, the jobless figure totaled 514,100. At the same time, employment went up by 2.1% to 14.67 million and the labor force rose 2.1% to 15.19 million. On a seasonally adjusted basis, the jobless rate stood at 3.3%, the same as in the prior month. The labor force participation rate in January 2018 was 68.2%, rose 0.1 percentage point as compared to the previous month. Year-on-year showed that labor force participation rate in January 2018 increased by 0.5 percentage point.

Stable unemployment rate for the year

Unemployment rate is expected to remain stable, if not continue to improve this year, in line with the 2018 (GDP forecast of 5.3%. The positive GDP growth projection is likely to lead to a corresponding increment in talent demand, particularly within key infrastructure and commercial sectors. Malaysia’s employment rate is currently at the optimal level and job seekers can have an overwhelming number of career options to choose from.

Continuous upbeat performance in external trade and industrial activities remain as supporting factors on Malaysia’s strengthening labor market which have translated into better performance in employment and wage growths. Manufacturing and wholesale and retail trade sectors accounted for most of labor demand, totaling a little over one–third share in overall employment. In the manufacturing sector for example, employment in the sector grew firmly by 2.5% yoy, supported largely by sub-sectors such as basic iron & steel products, electrical capacitor resistor & components, and refined petroleum products. Hence, the spill- over effects caused wage growth to advance by 13.3% yoy during the month. The upward trend in the wage growth will positively contribute to domestic consumption in the near term.

The robust performance in the main sector will benefit Malaysia, with healthy job creation which would ultimately be reflected in better spending activities. The domino effect from this encouraging scenario will eventually be reflected in Malaysia’s GDP for 2018.

Source: BIMB Securities Research - 16 Mar 2018