Malaysia’s unemployment rate remained unchanged at 3.5% in March, retaining the three-year low recorded in February as the economy recovered further from the pandemic disruptions. The number of unemployed dropped by 12.0% YoY to 588.7k, while employment climbed by 2.9% to 16.22mn. An improving labor force situation during the month was mirrored by the rising number of employed persons, while the number of unemployed further decreased. An optimistic economic position in March 2023 has allowed the country's labor market to continue to develop steadily. Labor market conditions are expected to improve further in 2023, providing impetus to household spending. The strong increase in employment levels seen in 2022 is expected to continue in 2023. Labor demand will remain favorable, supported by ongoing recovery in tourism-related activities and expansion plans by some manufacturers and retailers. Policy measures remain in place, with targeted assistance such as cash transfers, various tax incentives, and social protection schemes remaining available for vulnerable households which will continue to support their spending. Given these drivers, the unemployment rate is projected to average at about 3.5% for 2023 as a whole. According to Bank Negara, unemployment rate is expected to drop steadily over the year to pre-pandemic average rate of 3.3% by year-end. At 3.3%, the economy would technically be at full employment.
Employment. The number of employed persons was on an upward trend, it increased by 0.2% (+33.7k persons) in March, reaching a total of 16.22mn persons, as compared to 16.19mn persons in February. Year-on-year, the number of employed persons posted an increase of 2.9% (+453.6k persons), as against 15.77mn persons (March 2022). In terms of the economic sector, the services sector saw a continued increase in the number of employed persons, with notable growth in wholesale & retail trade; food & beverage services, and administrative & support service activities. Similar trends in employment were observed in the manufacturing, construction, and mining & quarrying sectors, as well as in agriculture. During the month, the employment-to-population ratio which indicates the ability of an economy to create employment, rose by 0.1 percentage points to 67.5% as compared to 67.4% in February 2023. As compared to March 2022, the ratio escalated by 1.1 percentage points from 66.4%.Out of the total employed persons during the month, 75.6% were in the employees’ category. This category registered a rise of 0.1% MoM (+14.8k persons) to record 12.26mn persons as compared to 12.25mn persons in February 2023. On the same note, the numbers of own-account workers, primarily consists of daily income earners who working as small business operators such as retailers, hawkers, sellers in market and stalls, as well as smallholders, also increased by 0.6% (+16.6k persons) to 2.91mn persons (Feb: 2.89mn persons). Meanwhile, the number of employed persons who were temporarily not working registered an increase of 14.7k persons (+18.3%) to 94.8k persons (Feb: 80.1k persons).
Unemployed. A steady job creation pushed the number of unemployed workers lower for the month. The number of unemployed persons in March continued to be on a downward trend, falling by 0.5% (-3.2k persons) to 588.7k persons (Feb: 591.9k persons). March’s unemployment rate remained at 3.5% (Feb: 3.5%). In a year-on-year comparison, the number of unemployed persons also went down by 12.0% (-80.5k persons) as against 669.2k persons recorded in March 2022. Accordingly, the unemployment rate edged down by 0.6 percentage points as compared to 4.1% in March last year. In March, 80.3% of the total unemployed persons were those who were available for work and were actively seeking jobs or the actively unemployed. This category dropped by 0.6% to 472.9k persons (Feb: 475.5k persons). Among the actively unemployed, 61.3% were those unemployed for less than three months, whereas 6.4% were those who had been in long-term unemployment for more than a year. Likewise, those who believed that there were no jobs available or the inactively unemployed, posted a decline of 0.5% to record 115.8k persons (Feb: 116.4k persons). This is expected to drop steadily in line with a recovery in affected sectors like services particularly leisure, accommodations and hospitality, tourism, the sub-sectors that borne the most brunt of the pandemic, particularly with the bullish tourist arrival which is forecast to reach more than 15mn in 2023.
Unemployment by Age Group. During the month, the unemployment rate for youth aged 15 to 24 years was reduced by 0.1 percentage points to 11.2%, recording 317.3k unemployed youths (Feb: 11.3%; 320.8k persons). In the meantime, the unemployment rate for youth aged 15 to 30 years increased by 0.1 percentage points to 7.1%, with the number of unemployed youths at 454.9k (Feb: 7.0%; 450.2kpersons).
Labor Force: The position of the country's labor market continues to be stable in line with the current economic developments. In this regard, the number of labor force in March 2023 strengthened further by 0.2% MoM or 30.5k persons to a fresh record high of 16.81mn persons (February 2023: 16.78mn persons). On a yearly basis, the number of labor force increased by 2.3% or 373.2k persons as compared to the same month of the previous year (March 2022: 16.44mn persons). In term of labor force by gender during the month, the male labor force for was 10.27mn persons (February 2023: 10.24mn persons), while the female’s labor force was 6.54mn persons (February 2023: 6.54mn persons). Year-on-year, both the male and female labor force continued to increase by 1.9% and 2.8% respectively (March 2022: 10.08mn persons; 6.36mn persons).
Participation Rate. March’s labor force participation rate (LFPR) stood at 69.9% (Feb: 69.9%). On a yearly basis, as the number of labor force increased by 2.3% YoY, accordingly, the LFPR improved by 0.7 percentage points as compared to 69.2% in March 2022. The number of persons outside the labor force continued its downward trend with a decline of 6.1k persons (-0.1%) to 7.23mn persons (Feb: 7.24mn persons). In the meantime, the number of persons outside the labor force continued to fall by 79.1k persons (-1.1%) year-on-year (Mar’22: 7.31mn persons). Housework/ family responsibilities were the main reasons for the outside labor force with a contribution share of 43.5%, while schooling/ training ranked second with 40.6%.
The unemployment rate was stable at 3.5% in March, as employment growth of 2.9% YoY and remained stronger than pre-pandemic average of 1.7% in 2019 and the labor force participation rate remained at a record high of 69.9%. That said, continued improvement in labor market remains supportive of income enhancements, helping to mitigate the erosion of household purchasing power from elevated but moderating price pressures, and keeping private consumption growth momentum alive.
The growing domestic economy, led to more labor demand to support continuous stabilisation of the economy as well as an increase in the creation of job opportunities to sustain the business market in the transition phase to endemic. Growth could potentially surprise on the upside as China reopens its economy, leading to improved external demand and influx of tourists from China. These are expected to support jobs creation for wholesale & retail trade, accommodation & food services as well entertainment & recreation services in coming months. We maintain our 2023 unemployment rate forecast of 3.5% (2022: 3.8%; 2021: 4.6%). Amid our forecast of slower real GDP growth of +4.50% this year vs the +8.7% growth last year, our jobless rate forecast for this year implies monthly jobless rate to largely move sideways during the course of 2023 after trending down in 2022 i.e., from 4.2% in January 2022 to 3.6% in September 2022-January 2023.
Source: BIMB Securities Research - 12 May 2023
Created by kltrader | Jul 17, 2024
Created by kltrader | Jul 17, 2024
Created by kltrader | Jul 17, 2024