The labour market situation continued to improve in Sep as more states progressed through the National Recovery Plan (NRP) phases. Employment rose +0.6% MoM (Aug: +0.5% MoM) following upward employment trend in services, manufacturing and construction sectors. The labour force grew +0.4% MoM (Aug: +0.3% MoM) while number of unemployed persons fell -2.6% MoM (Aug: - 3.8% MoM). Following this, the unemployment rate was lowered to 4.5% (Aug: 4.6%).

DATA HIGHLIGHTS

As of end-Sep, only Kedah remained in Phase 1 of the NRP. With more business activities allowed with extended operating hours, the labour market situation has continued to improve. The number of unemployed persons declined on a MoM (-2.6%; Aug: -3.8%) and YoY basis (-1.1%; Aug: +1.0%). The unemployment rate retreated to 4.5% (Aug: 4.6%), back to May 2021 level before the stringent lockdown in Jun 2021.

In terms of unemployment duration, the share of unemployed for less than 3 months (54.6%; Aug: 53.8%) and 6 to less than 12 months (12.9%; Aug: 12.8%) has risen, while those without a job for 3 to less than 6 months (24.1%; Aug: 24.5%) and over 1 year (8.4%; Aug: 9.0%) fell.

Employment growth gained momentum on a MoM (+0.6%; Aug: +0.5%) and YoY basis (+1.8%; Aug: +1.5%), mainly driven by higher employment in the services sector, particularly in wholesale & retail trade, food & beverages services and information & communication activities. This is in line with the recovery in services sector following reopening of economy. Manufacturing and construction sectors also contributed positively to employment growth, while agriculture and mining sectors continued to observe downward employment trend. By status of employment, the share of own account workers slightly expanded (16.6%; Aug: 16.5%) while the share of employees decreased (77.1%; Aug: 77.4%). Meanwhile, the number of employed persons who were temporarily not working declined for the third consecutive month to 380.7k persons (Aug: 671.2k persons).

The labour force expanded on a MoM (+0.4%; Aug: +0.3%) and YoY basis as well (1.6%; Aug: 1.4%). Consequently, the labour force participation rate inched up to 68.6% (Aug: 68.4%).

Separately, SOCSO reported lower loss of employment (LOE) in Oct of 4.3k (Sep: 5.4k). Selangor (35%) and KL (22%) remained the two states with highest LOE concentration. In terms of industry, LOE was prominent in manufacturing and wholesale & retail.

The government has approved wage subsidy applications worth RM18.6bn under various wage subsidy programmes (PSU) so far. As of 8th Oct, 2.64m workers benefitted from PSU 1.0, 0.7m from PSU 2.0, 1.5m from PSU 3.0 and 1.1m from PSU 4.0.

HLIB’s VIEW

As of 9th Nov, only two states (Kelantan, Sarawak) have not progressed to Phase 4 of the NRP. With the wider reopening and revival of tourism activities, alongside eventual approval of more vaccinated travel lanes with other countries, the labour market is anticipated to further improve. This is also reflected by the lower LOE number in Oct, which acts as a leading indicator for the employment situation. We maintain our 2021 GDP forecast at +4.1%.

Source: Hong Leong Investment Bank Research - 10 Nov 2021