The labour market continued to strengthen in Apr following the reopening of international borders and Ramadan celebrations. Employment rose (+0.5% MoM; Mar: +0.2% MoM), following upward employment trend in most sectors, except mining. The labour force grew +0.4% MoM (Mar: +0.2% MoM), while number of unemployed persons fell -3.0% MoM (Mar: -0.4% MoM). Consequently, the unemployment rate fell to 3.9% (Mar: 4.1%).

DATA HIGHLIGHTS

The labour market situation continued to strengthen in Apr following the reopening of the country’s international borders which stimulated the tourism sectors, as well as an increase in Ramadan-related business operations and EPF special withdrawal scheme during the month. The number of unemployed persons declined at a faster pace on a MoM (-3.0%; Mar: -0.4%) and YoY basis (-12.6%; Mar: -11.2%). Consequently, the unemployment rate fell below 4.0% for the first time since the Covid -19 outbreak at 3.9% (Mar: 4.1%).

In terms of unemployment duration, the share of unemployed for less than 3 months (58.1%; Mar: 57.1%) increased, while the share without a job for longer durations of 3 to less than 6 months (22.9%; Mar: 23.2%) and 6 to less than 12 months (12.0%; Mar: 12.5%) decreased. The share of unemployed for more than 1 year was unchanged (7.1%; Mar: 7.1%).

Employment growth gained momentum on a MoM (+0.5%; Mar: +0.2%) and YoY basis (+3.3%; Mar: +2.9%), driven by continued growth in services, manufacturing and construction sectors, as well as an upturn in agriculture employment after almost two years of MoM decline, offsetting the persistent downtrend in the mining sector. In the services sector, the upward trend mainly stemmed from wholesale & retail trade, food & beverage services and human health & social work activities. By status of employment, the share of both own account workers (+1.2% MoM; Mar: +0.6% MoM) and employees (+0.3% MoM; Mar: +0.1% MoM) grew. Meanwhile, the number of employed persons who were temporarily not working declined to 88.3k persons (Mar: 93.9k).

The labour force also expanded on a MoM (+0.4%; Mar: +0.2%) and YoY basis (+2.5%; Mar: +2.2%), resulting in further increase of the labour force participation rate to 69.4% (Mar: 69.2%).

Separately, SOCSO reported a decline in loss of employment (LOE) in May (2.2k; Apr: 3.0k), concentrated mostly in transportation, manufacturing and construction industries. Selangor (27.8%) and KL (27.8%) remained the two states with highest LOE concentration.

As of 20 May, the government approved wage subsidy applications totalling RM20.83bn under its five wage subsidy programmes (PSU), thus maintaining the employment of 2.96m employees, amounting to 17.9% of total labour force.

HLIB’s VIEW

The labour market is expected to continue on its recovery trajectory as the nation reopens international borders, and transition to endemicity which allows more economic sectors to reopen. The reopening of international borders are also anticipated to help ease the labour shortage issues prevalent in all economic sectors, especially agriculture sector. We maintain our 2022 GDP forecast at +5.5% and expectation for BNM to raise OPR by 50bps in 2H22.

Source: Hong Leong Investment Bank Research - 10 Jun 2022