The labour market situation showed modest signs of improvement in Apr. Employment rose +0.1% MoM (Mar: +0.4% MoM), contributed by services, manufacturing and construction sectors. The continued expansion in labour force (+0.1% MoM; Mar: +0.2% MoM) and fall in unemployed persons (-1.4% MoM; Mar: -3.1% MoM) brought the unemployment rate slightly lower to 4.6% (Mar: 4.7%).

DATA HIGHLIGHTS

Labour market conditions showed modest signs of improvement in Apr when most states were in RMCO/CMCO. In conjunction with the festive month of Ramadhan, more bazaars and night market activities were allowed to operate, bringing some reprieve to the labour market situation which saw a lower unemployment rate of 4.6% (Mar: 4.7%). The number of unemployed persons declined at a slower pace on a MoM basis (-1.4%; Mar: -3.1%), and recorded its first decline on a YoY basis (-4.6%; Mar: +23.4%) after fourteen consecutive months of increase, due to high base effect.

In terms of unemployment duration, the share of unemployed for less than 3 months (52.1%; Mar: 51.1%) and 3 to less than 6 months (24.4%; Mar: 24.3%) rose, while those without a job for 6 to less than 12 months (13.0%; Mar: 13.7%) and more than 1 year (10.4%; Mar: 10.9%) decreased.

Employment rose at a slower pace of +22.7k persons or +0.1% MoM (Mar: +58.7k persons, +0.4% MoM). On a YoY basis, growth accelerated (+2.8%; Mar: +0.6%), driven by low base effect. Sectorial wise, the services sector continued on its upward trend, mainly in ‘wholesale & retail trade’, ‘food & beverages services’, ‘education’ and ‘human health & social work’ activities. The reopening of schools in Apr also allowed other education-related businesses to expand their operations. Meanwhile, manufacturing and construction sectors remained on an uptrend while agriculture and mining & quarrying employment continued to decline. In terms of status of employment, the share of employees (77.9%; Mar: 77.9%) and own account workers (16.2%; Mar: 16.2%) steadied, while the number of employed persons who were temporarily not working fell to 116.0k persons (Mar: 121.0k persons) following continuous resumption of most business activities during the month.

Labour force participation rate stood at 68.6% (Mar: 68.6%) following modest increase in size of labour force (+12.2k; Mar: +34.3k).

Separately, SOCSO reported that loss of employment (LOE) continued to fall in May (3.7k; Apr: 5.0k) despite undergoing nationwide MCO3.0 from 12th May onwards.

On government’s initiatives to support labour market, as of 21st May, a total of RM14.1bn has been distributed under the Wage Subsidy Programme (PSU) 1.0 and 2.0, benefitting 3.28m workers (20.4% of labour force).

HLIB’s VIEW

The newly imposed total lockdown could slow the pace of labour market recovery as employers may hold back on future hiring decisions until Covid-19 situation stabilises. During the stricter MCO 3.0 that started from 1st June, according to MITI, only 22% of the 586,308 companies (with 10.2m workforce) registered under the Covid-19 Intelligent Management System (CIMS) 3.0 had obtained approval to operate during this period, involving 1.57m workers (9.8% of labour force) as of 3rd June. For now, we maintain our forecast for BNM to maintain the OPR at 1.75% in 2021 and GDP forecast of 4.6%

Source: Hong Leong Investment Bank Research - 10 Jun 2021