• Unemployment rate maintained at 3.3%

• The number of unemployed persons declined 0.5% yoy to 505,000

• Employment expanded by 2.8% to 14,853,000; all-time high growth

• Labor force grew by 2.6% to 15,358,000

• Labor force participation rate breached 68.4%; the highest rate ever recorded

• Sturdy labor market despite slower growth in export

Employment continued to expand in May as it increased by 2.8% yoy following a 2.6% rise in the previous month, reaching an all-time high growth. Similarly, the labor force grew marginally higher to 2.6% yoy in May and marked the highest growth ever recorded. Meanwhile, the labor force participation rate also reached the highest rate in history as it breached 68.4% after being stationary at 68.2% for four consecutive months.

Jobs added in the labor market registered at 49.5k, lower than 70k registered in the preceding month. On the other hand, the number of unemployed person which has been declining since February 2018 contracted by 0.5% yoy in May following a 0.4% drop for two months in row. Nonetheless, the unemployment rate for May remained stable at 3.3% yoy for four consecutive months.

Sturdy labor market despite slower growth in export

Labor market remains healthy and unemployment remained stable at 3.3% since February 2018. Moreover, employment growth reached a new growth record of 2.8% yoy in May. Likewise, the labor force participation rate also marked the highest rate ever recorded in May as it reached 68.4%.

Even though there was a slower growth in export as well as industrial production for the month of May, the labor market remained strong. This might be due to the robust current economic condition that led to a better job creation in all sectors. As manufacturing sector is the main anchor of Malaysian export, any negative news related to electric and electronic (E&E) sectors will give a huge impact towards the industry as the E&E products contributed 35.5% over total Malaysia export. Slower export growth this year saw the number of employees engaged in the manufacturing sectors started to decelerate and registered the lowest growth in May 2018 (1.7%) after 1.4% increase in February 2017. Nevertheless, GDP is expected to grow at a slower pace this year as compared to 2017. We might see the uncertainties in external trade performance as a result of trade war between US and their rivals in trade.

Source: BIMB Securities Research - 17 Jul 2018