Bimb Research Highlights

Economic - Robust Labor Market Persists

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Publish date: Mon, 13 May 2024, 05:11 PM
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Bimb Research Highlights
  • Steady Expansion in Both Workforce and Employment
     
  • The Number of Unemployed Persons Declined Further
     
  • Unemployment rate stood at 3.3%
  • Participation rate remained sound at 70.3%
  • Persisted unemployment rate across advanced economies
  • Malaysia’s labor market is expected to stay stable in 2024

OVERVIEW

Malaysia's workforce maintained its robust performance in March 2024, buoyed by a better economic and business outlook. The labor force in March 2024 continued to strengthen, increasing by 0.1% MoM to 17.10mn persons. The number of employed persons continued to climb, rising by 0.1% MoM reaching a record of 16.53mn persons. Meanwhile, the number of unemployed persons continued its downward trend, declining by 3.8% YoY to 566.6 thousand persons. The unemployment rate remained steady for the fifth straight month in March at 3.3% (Feb: 3.3%), maintaining its lowest since January 2020. The labor force participation rate increased by 0.1% to 70.3% in March.

In March, Malaysia's labor market remained stable, demonstrating an increased ability to generate employment. This corresponds with the continual enhancement of the domestic economic environment and is consistent with the global economic growth trajectory.

The number of employed persons continued to increase, rising by 0.1% MoM (+24.3k persons) to record 16.53mn persons (Feb: 16.51mn). The number of employed individuals increased by 1.9% YoY or equivalent to +309.2k persons (Mar’23: 16.22mn persons). During the month, the employment-to-population ratio, a gauge of an economy's employment creation capability, remained at 67.9% (Feb: 67.9%). Comparatively, this ratio posted 0.4 percentage points growth from 67.5% in March 2023.

Across various economic sectors, the Services sector maintained a positive trajectory in the number of employed individuals, specifically in Wholesale & retail trade, Food & beverage services, and Information & communication activities. Likewise, the Manufacturing, Construction, Mining & quarrying, and Agriculture sectors also saw an increase in the number of employed individuals.

By employment status, most of the employment came from the formal sector (employees: 75.1%, employers: 3.6%), while the informal sector (proxied by own-account workers) accounted for 18.3% of total recruitment in March. The remaining 3.0% were unpaid family workers. Employment in the employees' category increased marginally by 0.1% MoM to 12.42mn persons (Feb: 12.41mn persons). Similarly, own account workers continued their growth trend, expanding by 0.3% MoM to 3.03mn persons (Feb: 3.02mn persons).

Meanwhile, the number of unemployed persons continued to decline, with a minimal drop of 0.1% MoM to 566.6k thousand persons (Feb: 567.0k persons). March’s unemployment rate stayed at 3.3% for the fourth straight month. On an annual basis, the number of unemployed persons slipped by 3.8% (-22.1k persons) compared to 588.7k persons in March 2023. Accordingly, the unemployment rate dropped by 0.2 percentage points from 3.5% in March last year.

The youth unemployment rate (aged 15-24) unchanged at 10.6% for fifth consecutive months, registering the number of unemployed youths at 306.3k persons (Feb: 10.6%; 306.6k persons), while the unemployed rate for those aged between 15-30 years stood at 6.6% with 434.5k unemployed youths (Feb: 6.6%; 434.8k persons). In terms of the unemployment category, 79.7% were actively unemployed, meaning they were available for work and actively seeking jobs. This category declined by 0.2% to reach 451.5k persons (Feb: 452.4k persons).

The labor force in March 2024 continued to strengthen, growing by 0.1% MoM to 17.10mn persons (Feb: 17.07mn persons). This lifted the labor force participation rate (LFPR) to a new record high of 70.3% (Feb: 70.2%). On a yearly basis, the number of labor force enhanced by 1.7% YoY or equivalent to 287.0k persons (Mar’23: 16.81mn persons). Hence, the LFPR was higher by 0.4 percentage points from 69.9% in March 2023.

The number of persons outside the labor force posted a slight drop of 0.003% MoM to 7.23mn persons (Feb: 7.23mn persons). On an annual basis, the number of outside labor force increased slightly by 0.03% from 7.23mn persons in March last year. The major composition of those outside the labor force was housework/ family responsibilities, accounting for 42.6%, while schooling/training ranked second with 41.4%.

Persisted unemployment rate across advanced economies

US jobless rate was inched back up to 3.9% in April 2024. Meanwhile, according to ADP payroll data, the US private sector employment grew 192k in April (Mar: 184k). Conversely, the Job Openings and Labor Turnover Survey (JOLTS) indicated a gradual easing of labor demand in the US, with job openings decreasing to 8.49mn in March from 8.81mn (revised) reading in the prior month. The Eurozone’s unemployment rate held steady at 6.5% in March. Likewise, Japan’s unemployment rate unchanged at 2.6% in March 2024.

OUTLOOK

Malaysia's unemployment rate held at 3.3% in March, its lowest since January 2020. The labor force participation rate remained at a record high of 70.3%, surpassing the total working population slightly. We expect a stable labor market in 2024, driven by ongoing employment growth fueled by economic expansion, manufacturing recovery, increased investments, infrastructure spending, and improved tourism. The unemployment rate is forecasted to remain at 3.3% this year, indicating near full employment. Despite a positive outlook, risks from geopolitical tensions, slow trade recovery, and cautious business sentiment due to domestic policy reforms could affect stability and job growth.

Source: BIMB Securities Research - 13 May 2024

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