• Continued Expansion in Both Labor Force and Employment
   
• The Number of Unemployed Persons Sustained Its Downtrend
   
• Unemployment rate remained at 3.3%

• Participation rate maintained at its record high of 70.2%

• Mixed unemployment rate among advanced economies

• Labor market in Malaysia is expected to strengthen further

OVERVIEW

Malaysia’s labor force maintained its convincing performance in January 2024, bolstered by a better economic and business outlook. The labor force in January 2024 saw further enhancement, increasing by 0.1% MoM to 17.05mn persons. The number of employed persons continued in an upward trend, with a rise of 0.2% MoM to record 16.48mn persons. In the meantime, the number of unemployed persons decreased further, with a marginal drop of 0.1% to 567.3 thousand persons. The unemployment rate remained unchanged for the third straight month in January at 3.3% (Dec: 3.3%), maintaining its lowest since January 2020. The labor force participation rate during the month was unchanged at 70.2%.

Malaysia’s labor market conditions remained stable in January with higher ability of creating jobs, in line with the ongoing improvement of the national economic situation and consistent with global economic expansion.

In January 2024, the number of employed persons continued in an upward trend, with a rise of 0.2% MoM (+25.3k persons) to record 16.48mn persons (Dec’23: 16.46mn). Year-on-year, the number of employed persons saw a rise of 2.0% (+323.7k persons) compared to the same month in the previous year (Jan’23: 16.16mn persons).

During the month, the employment-to-population ratio, which denotes the ability of an economy to create employment, breached a fresh high at 67.9% (Dec’23: 67.8%). Comparatively, this ratio posted 0.6 percentage points growth from 67.3% in January 2023.

Across various economic sectors, the number of employed persons in the Services sector remained increasing, notably in wholesale & retail trade; food & beverage services; and transportation & storage activities. A similar trend was also observed in the number of employed persons in the manufacturing, construction and mining & quarrying sectors. The number of employed persons in the agriculture sector rebounded during the month compared to last month.

By employment status, majority of the employment were from the formal sector (employees: 75.2%, employers: 3.5%), against informal sector (proxied by ownaccount workers) that constituted 18.3% of total recruitment in Jan. The remaining 3.0% were unpaid family workers. Employment in the employees' category increased marginally by 0.1% MoM to 12.39mn persons (Dec’23: 12.38mn persons). Similarly, own account workers sustained its growth expansion and rose 0.3% MoM to 3.01mn persons (Dec’23: 3.0mn persons). Meanwhile, growth in employers (Jan’24: 0.3% MoM; Dec’23: 1.0%) moderated, while unpaid family workers (Jan’24: -0.2%; Dec’23: -0.2%) declined for the second straight month.

Meanwhile, the number of unemployed persons decreased further, with a marginal drop of 0.1% MoM to 567.3k thousand persons (Dec’3: 567.8k persons). January’s unemployment rate remained at 3.3% as recorded in the previous month. On an annual basis, the number of unemployed persons declined by 4.8% (-28.8k persons) compared to 596.1k persons in January 2023. Accordingly, the unemployment rate declined by 0.3 percentage points from 3.6% in January last year.

The youth unemployment rate (aged 15-24) stood at 10.6% for three consecutive months, recording the number of unemployed youths at 306.8k persons (Dec’23: 10.6%; 307.2k persons), while the unemployed rate for those aged between 15-30 years jumped to a four-month high of 6.7% with 439.7k unemployed youths (Dec’23: 6.4%; 432.1k persons).

In terms of the unemployment category, 79.8% of the total unemployed persons were actively unemployed or those who were available for work and were actively seeking jobs. This category edged down by 0.2% to record 452.5k persons (Dec’23: 453.6k persons).

The labor force in January 2024 saw further enhancement, increasing by 0.1% MoM to 17.05mn persons (Dec’23: 17.03mn persons). The labor force participation rate (LFPR) was unchanged at 70.2%, as in the preceding month. Comparing with the same month of the previous year, the number of labor force improved by 1.8% YoY or equivalent to 294.9k persons (Jan’23: 16.76mn persons). Therefore, the LFPR was higher by 0.4 percentage points from 69.8% in January 2023.

The number of persons outside the labor force posted a slight decline of 0.01% MoM to 7.23mn persons (Dec’23: 7.23mn persons). On an annual basis, the number of outside labor force fell by 0.1% from 7.24mn persons in January last year. The major composition of those outside the labor force was housework/ family responsibilities, accounting for 42.5%, while schooling/training ranked second with 40.8%.

Mixed unemployment rate among advanced economies

US jobless rate was unchanged at 3.7% in January 2024. Meanwhile, according to ADP payroll data, the US private sector employment rose 140k in February (Jan: 111k). By sector, goods-producing jobs rose 30k while service-providing jobs rose 110k. On the other hand, the Job Openings and Labor Turnover Survey (JOLTS) continued to show labor demand and supply in the US coming into a better balance with job openings fell slightly in January to 8.86mn from a downwardly revised 8.89mn reading in the prior month. The jobless rate in the Eurozone remained stable at a record low of 6.4% in January. Japan’s unemployment rate Japan’s unemployment rate stood at 2.4% in January 2024, unchanged from the previous month. Across the globe, unemployment rate in China increased to 5.2% in January from 5.1% in December of 2023.

OUTLOOK

Malaysia's unemployment rate remained at 3.3% in January, maintaining its lowest since January 2020. Labor force participation rate sustained at a record high of 70.2% as the total labor force increased slightly higher than the total working population. We continue to expect the labor market to remain stable throughout 2024, given the sustained employment growth registered in the recent month. This is also due to anticipation that the hiring activities will remain stable on the back of further expansion in economic activities alongside the recovery in the manufacturing sector as well the impact of higher realization of committed investments, ongoing infrastructure spending and improving tourism activities. This situation is expected to continue to generate increased demand for employment, thus serving as an important key to sustaining economic stability. We hold to our view that the unemployment rate will hold steady at 3.3% this year, a technically full employment level. The downside risks to domestic labor market among others include geopolitical tensions and slower external trade recovery while domestic policy reforms could add cautious business sentiment.

Source: BIMB Securities Research - 11 Mar 2024