• Employment grew by 2.4% yoy to 14,937,100; an all-time high

• The number of unemployed persons rose by 0.8% yoy to 513,000

• Labor force moderated to 2.4% yoy to 15,450,000

• Labor force participation rate remained at 68.5%

• Unemployment rate remained at 3.3% for the second consecutive month

• Supply side broad-based growth may benefit employment

Employment rate moderated to 2.4% yoy to 14.94m in October from 2.6% in the previous month. However, despite employment growth slowing, the number of employed persons in October reached the highest value ever recorded, beating last month’s figure of 14.93m. Jobs added in October were registered at 10.6k, lower than 30.0k recorded in the preceding month. The number of unemployed rose by 0.8% yoy to 513,000 in October, higher than previous month’s growth of 0.4% yoy.

Notwithstanding, labour force expanded by 2.4% yoy to 15.45m in October after posting a stable growth of 2.6% for three consecutive months since July. The labour force participation rate was stable at 68.5% in October. As a result, the unemployment rate remained unchanged at 3.3% yoy in October.

Supply side broad-based growth may benefit employment

Moving forward, we expect broad-based positive growth across all sectors. There will be a recovery in mining sector as the supply shocks are likely to dissipate further coupled with enhancements from new refinery production that could lift growth in 2H19. The production from mining sector picked up by 1.4% yoy (Sep: -6.2%) in October after a prolong decline since May 2018 mainly due to the reduction of natural gas and crude oil production. With the expectation of the turnaround in mining sector in 2019, we believe it could benefit the job market specifically in mining and quarrying sector. There was an obvious spike on the number of job vacancies in September when it reached 1,934 from 173 or an increase of 11.6% yoy. This was the highest job vacancies in mining and quarrying since September 2015, which stood at 5,376 and at the same time surged by 65.4% yoy.

Besides the mining sector, we foresee the agriculture sector to rebound in 2019 following an uptick in production of CPO whilst Malaysia’s external trade and IPI performance is expected to expand at steady pace amid escalating trade tensions. Positive growth in these sectors could eventually be translated into an increase in jobs added, stable wage growth and indirectly provide additional support to Malaysia’s domestic demand in 2019.

On the other hand, Malaysia would probably face an employment issue in some other sectors. For example, recently more than half of employees in Utusan Melayu were offered a voluntary separation scheme (VSS) as part of its restructuring exercise to reduce overall costs due to the company's financial constraints. Likewise, Astro will also be letting go of a number of its employees via a VSS in light of challenging overall economic landscape. However, we maintained our unemployment rate forecast at 3.3% in 2018 and 2019.

Source: BIMB Securities Research - 17 Dec 2018