The employment situation continued to improve in Oct with the further resumption of economic activities including interstate travel. Employment rose at a steady pace (+0.6% MoM; Sep: +0.6% MoM) following upward employment trend in services, manufacturing and construction sectors. The labour force also grew +0.4% MoM (Sep: +0.4% MoM) while number of unemployed persons fell - 3.4% MoM (Sep: -2.6% MoM). Consequently, the unemployment rate fell to 4.3% (Sep: 4.5%), the lowest since Apr 2020.

DATA HIGHLIGHTS

The labour market situation continued to make progress in Oct. By the end of the month, most states have transitioned to Phase 4 of the NRP except Kedah, Kelantan, Pulau Pinang, Perak, Perlis, Sabah and Sarawak (63.6% of GDP; end-Sep: 4.0% of GDP). The number of unemployed persons declined at a faster pace on a MoM (-3.4%; Sep: -2.6%) and YoY basis (-5.8%; Sep: -1.1%). The unemployment rate also fell to 4.3% (Sep: 4.5%), the lowest since Apr 2020.

In terms of unemployment duration, the share of unemployed for less than 3 months has risen (55.5%; Sep: 54.6%), but shrank for periods of 6 to less than 12 months (12.5%; Sep: 12.9%) and over 1 year (7.8%; Sep: 8.4%).

Employment grew at a steady pace on a MoM basis (+0.6%; Sep: +0.6%) and picked up on a YoY basis (+2.3%; Sep: +1.8%), driven by upward employment trend in the services sector, particularly in wholesale & retail trade, food & beverages services, information & communication and transport & storage activities following reopening of interstate travel for fully vaccinated individuals. Manufacturing and construction sectors contributed to employment growth as well, following further resumption of economic activities. However, employment in agriculture and mining sectors continued to decline. By status of employment, the share of own account workers grew (16.8%; Sep: 16.6%) while the share of employees decreased (77.0%; Sep: 77.1%). Meanwhile, the pool of employed persons who were temporarily not working shrank further 122.7k persons (Sep: 380.7k persons).

The labour force also continued to expand on a MoM (+0.4%; Sep: +0.4%) and YoY basis (+1.9%; Sep: +1.6%). Consequently, the labour force participation rate increased to 68.8% (Sep: 68.6%), the highest since Jan 2020.

Separately, SOCSO reported lower loss of employment (LOE) in Nov (up to 26th Nov) at 3.0k (Oct: 4.4k). LOE was most prominent in manufacturing and tourism-related industries. Selangor (37.8%) and KL (26.7%) remained the two states with highest LOE concentration.

As of 19th Nov, the government has approved wage subsidy applications worth RM19.5bn under its four wage subsidy programmes (PSU). 2.64mn workers benefitted from PSU 1.0, 0.72mn from PSU 2.0, 1.52mn from PSU 3.0 and 1.62mn from PSU 4.0.

HLIB’s VIEW

As at 8th Dec, the number of states in Phase 4 account for 85.6% of GDP, a further improvement from end-Oct of 63.6% of GDP. The further normalisation of economic activities will help spur demand for labour and facilitate a quicker recovery in the labour market situation, especially in the services sector. Nevertheless, in level terms, the number of unemployed (Oct: 705k) is still elevated relative to pre-pandemic times (Feb 2020: 525.2k) while underemployment remains high at 2.2mn workers (4Q19: 1.7mn) as well. We maintain our 2021 GDP forecast at +3.5%.

Source: Hong Leong Investment Bank Research - 9 Dec 2021