The labour market situation continued its recovery in Nov following further but softer employment growth (+0.4% MoM; Oct: +0.6% MoM) driven by services, manufacturing and construction sectors. The labour force also grew at a softer pace (+0.3% MoM; Oct: +0.4% MoM) while number of unemployed persons continued to fall (-1.5% MoM; Oct: -3.4% MoM). Thus, the unemployment rate held steady at 4.3% (Oct: 4.3%).

DATA HIGHLIGHTS

The labour market situation continued its recovery in Nov. By the end of the month, most states have transitioned to Phase 4 while Kelantan and Sarawak remained in Phase 3 (85.6% of GDP; end-Oct: 63.6% of GDP). The number of unemployed persons continued to decline on a MoM (-1.5%; Oct: -3.4%) and YoY basis (-9.2%; Oct: -5.8%) to 694.4k persons (Oct: 705k persons), the lowest level since Apr 2020. The unemployment rate held steady at 4.3% (Oct: 4.3%).

In terms of unemployment duration, the share of unemployed for periods of less than 3 months (55.7%; Oct: 55.5%) and 6 to less than 12 months (12.9%; Oct: 12.5%) has risen, while those without a job for 3 to less than 6 months (23.6%; Oct: 24.1%) have shrunk.

Employment growth continued at a softer pace on a MoM basis (+0.4%; Oct: +0.6%) but picked up on a YoY basis (+2.7%; Oct: +2.3%), driven by services, manufacturing and construction sectors as economic activity continued to normalise. In the services sector, the upward trend mainly stemmed from wholesale and retail trade, food & beverages services; and transport & storage activities. Nevertheless, declining employment trend persisted in agriculture and mining sectors. By status of employment, the share of own account workers maintained (16.8%; Oct: 16.8%) while the share of employees decreased slightly (76.9%; Oct: 77.0%). Meanwhile, the pool of employed persons who were temporarily not working has downsized to 112.2k persons (Oct: 122.7k persons).

The labour force continued to expanded on a MoM (+0.3%; Oct: +0.4%) and YoY basis (+2.2%; Oct: +1.9%). Consequently, the labour force participation rate inched up to 68.9% (Oct: 68.8%).

Separately, SOCSO reported lower loss of employment (LOE) in Dec at 3.2k (Nov: 3.3k), concentrated mostly in the manufacturing industry. Selangor (33.2%) and KL (27.4%) remained the two states with highest LOE concentration.

As of 10th Dec, the government has approved wage subsidy applications worth RM19.8bn under its four wage subsidy programmes (PSU). In totality, 2.95m employees have benefitted from these programmes, amounting to 18.1% of total labour force.

HLIB’s VIEW

Improvement in the employment situation has been gradual as the unemployment rate (4.3%) remains elevated relative to Feb 2020’s pre-pandemic rate of 3.3%. As at 3rd Jan, all states have progressed to Phase 4 of the NRP. While this is expected to provide further support for the labour market recovery amid normalisation of economic activities, the spread of more transmissive Covid variants poses a risk to recovery, which has already led to some tightening of international travel restrictions. We maintain our expectation for a 25bps hike to OPR in 4Q 2022.

Source: Hong Leong Investment Bank Research - 11 Jan 2022