• Consistent Growth in Workforce and Employment
   
• The Number of Unemployed Persons Continued to Decline
   
• Unemployment rate persisted at 3.3%

• Participation rate remained strong at 70.3%

• Malaysia’s labor market is expected to remain steady in 2024

OVERVIEW

Malaysia's workforce sustained strong performance in April 2024, boosted by an improving economic and business outlook. The labor force in April 2024 continued to strengthen, increasing by 0.1% to 17.12mn persons. The number of employed persons continued to rise, rose by 0.1% MoM reaching a record of 16.56mn persons. Meanwhile, the number of unemployed persons continued its downward trajectory, declining slightly by 0.04% YoY to 566k. Unemployment rate held steady for the sixth straight month in April at 3.3% (Mar: 3.3%), maintaining its lowest since January 2020. The labor force participation rate remained stable at 70.3% in April.

In April, Malaysia's labor market showed stability, indicating an improved capacity to create jobs. This aligns with ongoing improvements in the domestic economic climate and is in line with global economic growth trends.

The number of employed persons continued to grow, increasing by 0.1% MoM (+23.5k persons) to reach 16.56mn persons (Mar: 16.53mn). The number of employed individuals increased by 1.9% YoY or equivalent to +304.3k persons (Apr’23: 16.25mn persons). During the month, the employment-to-population ratio, a gauge of an economy's employment creation capability, grew by 0.1% to 68.0% (Mar: 67.9%). Comparatively, this ratio posted 0.5 percentage points growth from 67.5% in April 2023.

Across various economic sectors, the Services sector saw a continued increase in employment, particularly in Information & Communication, Food & Beverage Services, and Transportation & Storage activities. Similarly, the Manufacturing, Construction, Mining & Quarrying, and Agriculture sectors also experienced growth in the number of employed persons during the month.

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 18.4% of total recruitment in April. The remaining 3.0% were unpaid family workers. Employment in the employees' category increased marginally by 0.1% MoM to 12.43mn persons (Mar: 12.42mn persons). Similarly, own account workers continued their growth trend, expanding by 0.3% MoM to 3.04mn persons (Mar: 3.03mn persons).

Meanwhile, the number of unemployed persons persists in decline, with a marginal decline of 0.04% MoM to 566.4k thousand persons (Mar: 566.6k persons). April's unemployment rate remained at 3.3%, consistent with the previous month's figure. On an annual basis, the number of unemployed persons slipped by 3.5% (-20.5k persons) compared to 586.9k persons in April 2023. Accordingly, the unemployment rate decreased by 0.2 percentage points from 3.5% in April last year.

The youth unemployment rate (aged 15-24) stayed at 10.6% for sixth consecutive months, recording the number of unemployed youths at 305.9k persons (Mar: 10.6%; 306.3k persons), while the unemployed rate for those aged between 15-30 years was 6.5% with 434.9k unemployed youths (Mar: 6.6%; 434.5k persons). In terms of the unemployment category, 79.7% were actively unemployed, meaning they were available for work and actively seeking jobs. This category saw a slight decline of 0.03%, reaching 451.4k persons (Mar: 451.5k persons).

The labor force in April 2024 continued to strengthen, rising by 0.1% MoM to 17.12mn persons (Mar: 17.10mn persons). The labor force participation rate (LFPR) was unchanged at 70.3% (Mar: 70.3%). On a yearly basis, the number of labor force grew by 1.7% YoY or equivalent to 283.7k persons (Apr’23: 16.84mn persons). Hence, the LFPR was higher by 0.3 percentage points from 70.0% in April 2023.

The number of persons outside the labor force posted a marginal decline of 0.01% MoM to 7.23mn persons (Mar: 7.23mn persons). On an annual basis, the number of outside labor force increased slightly by 0.1% from 7.23mn persons in April last year. The major composition of those outside the labor force was housework/ family responsibilities, accounting for 42.7%, while schooling/training ranked second with 41.4%.

Elevated unemployment rate across advanced economies

The U.S. unemployment rate increased to 4.0% in May 2024. According to ADP payroll data, the US private sector employment grew 152k in May (Apr: 188k). Canada’s unemployment rate rose to 6.2% in May (April: 6.1%). Conversely, Italy’s unemployment rate dropped to 6.9% in April (Mar: 7.2%). Meanwhile, Japan’s unemployment rate stood at 2.6% in April 2024.

OUTLOOK

Malaysia's unemployment rate stood at 3.3% in April, marking its lowest since January 2020. The labor force participation rate stayed at a record high of 70.3%, slightly exceeding the total working population. We anticipate a stable labor market in 2024, bolstered by continuous employment growth from a strong domestic economy, recovery in external trade, increased investments, and enhanced tourism activity. The unemployment rate is projected to stay at 3.3% this year, signaling near full employment condition. Despite favorable outlook, challenges stemming from geopolitical tensions, sluggish trade recovery, and cautious business sentiment due to domestic policy reforms may undermine stability and job creation.

Source: BIMB Securities Research - 11 Jun 2024