The labour market situation showed a slight improvement in Mar following modest employment growth (+0.2% MoM; Feb: +0.3% MoM) driven by services, manufacturing and construction sectors. The labour force grew at a steady pace (+0.2% MoM; Feb: +0.2% MoM), while the decline in unemployed persons slowed (-0.4% MoM; Feb: -1.3% MoM). Consequently, the unemployment rate remained at 4.1% (Feb: 4.1%).

DATA HIGHLIGHTS

The labour market situation showed a slight improvement in Mar as businesses largely resumed normal operations. The number of unemployed persons continued to decline on a MoM (-0.4%; Feb: -1.3%) and YoY basis (-11.2%; Feb: -13.6%), albeit at a slower pace, while the unemployment rate held steady at 4.1% (Feb: 4.1%).

In terms of unemployment duration, the share of unemployed for less than 3 months increased (57.1%; Feb: 56.7%), while the share without a job for longer durations of 3 to less than 6 months (23.2%; Feb: 23.4%), 6 to less than 12 months (12.5%; Feb: 12.6%) and more than 1 year (7.1%; Feb: 7.3%) decreased.

Employment growth continued at a softer pace on a MoM (+0.2%; Feb: +0.3%) and YoY (+2.9%; Feb: +3.0%) basis, driven by services, manufacturing and construction sectors. In the services sector, the upward trend mainly stemmed from wholesale and retail trade, food & beverages services, and human health & social work activities. Nevertheless, employment in agriculture and mining sectors remained on a downtrend. In terms of employment status, own account workers rose +0.6% MoM (Feb: +0.7% MoM), while employees growth sustained at +0.1% MoM (Feb: +0.1% MoM). The number of employed persons who were temporarily not working increased slightly to 93.9k persons (Feb: 89.0k persons), partly due to the school holiday season during the month.

The labour force recorded steady expansion on a MoM (+0.2%; Feb: +0.2%) and YoY basis (+2.2%; Feb: +2.2%), reflecting increasing optimism on the employment outlook and economic recovery. In line with this, the labour force participation rate edged higher to 69.2% (Feb: 69.1%).

Separately, SOCSO reported slightly lower loss of employment (LOE) in Apr (3.0k; Mar: 3.1k), concentrated mostly in manufacturing, transportation and professional & technical industries. Selangor (27.4%) and KL (25.5%) remained the two states with highest LOE concentration.

As of 15th Apr, the government approved wage subsidy applications totalling RM20.76bn under its five wage subsidy programmes (PSU), thus maintaining the employment of 2.96m employees, amounting to 18.0% of total labour force.

HLIB’s VIEW

Labour market conditions are anticipated to improve further as the economy returns to normalcy, with full reopening of all economic activities alongside positive spill overs to tourism-related industries as a result of borders reopening. Following better-than expected March economic data release that is anticipated to further support 1Q22 GDP, we now expect BNM to raise OPR by 50bps in 2H 2022 (previous: 25bps).

Source: Hong Leong Investment Bank Research - 11 May 2022