The pace of labour market recovery continued at a slower pace in May. Employment grew moderately by +0.3% MoM (Apr: +0.5% MoM), supported by employment gains in most sectors, except mining. The labour force also expanded at a softer pace (+0.2% MoM; Apr: +0.4% MoM), while the number of unemployed persons fell -1.8% MoM (Apr: -3.0% MoM). Consequently, the unemployment rate maintained at 3.9% (Apr: 3.9%).

DATA HIGHLIGHTS

The pace of labour market recovery continued, albeit at a slower pace in May as the nation undergoes its transition to endemicity. The decline in number of unemployed persons slowed on a MoM (-1.8%; Apr: -3.0%) and YoY basis (-12.4%; Apr: -12.6%), while the unemployment rate held steady at 3.9% (Apr: 3.9%).

In terms of unemployment duration, the share of unemployed for less than 3 months (58.6%; Apr: 58.1%) increased, while the share without a job for longer durations of 6 to less than 12 months (11.6%; Apr: 12.0%) and more than 1 year (6.9%; Apr: 7.1%) decreased. Meanwhile, the share of unemployed for 3 to less than 6 months was unchanged (22.9%; Apr: 22.9%).

Employment growth continued at a softer MoM pace (+0.3%; Apr: +0.5%) but ticked higher on a YoY basis (+3.4%; Apr: +3.3%). Growth continued to be supported by upward employment in services, manufacturing, construction and agriculture sectors. In the services sector, the upward trend mainly stemmed from wholesale & retail trade, information & communication activities, and food & beverages services. However, employment in the mining sector remained on a downtrend. By status of employment, both own account workers (+0.7% MoM; Apr: +1.2% MoM) and employees moderated (+0.2% MoM; Apr: +0.3% MoM). Meanwhile, the number of employed persons who were temporarily not working increased to 94.1k persons (Apr: 88.3k persons), which was partly attributed to the festive season during the month.

The labour force continued to expand on a MoM (+0.2%; Apr: +0.4%) and YoY basis (+2.7% YoY; Apr: +2.5% YoY). Following this, the labour force participation rate inched higher to 69.5% (Apr: 69.4%).

Separately, SOCSO reported a slight uptick in loss of employment (LOE) in Jun (2.4k; May: 2.2k), concentrated mostly in manufacturing, transportation, and professional & technical industries. Selangor (30.3%) and KL (29.1%) remained the two states with highest LOE concentration.

As of 17 Jun, the government approved wage subsidy applications totalling RM20.87bn 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

Recovery in the labour market is expected to continue as the nation transitions to endemicity. Nevertheless, the acute foreign labour shortage remains an issue prevalent in all economic sectors, which is only expected to see a meaningful recovery towards the later part of the year. We maintain our 2022 GDP forecast at +5.9% YoY and expectation for BNM to raise OPR by another 25bps in Sep, bringing OPR to 2.5% by end-2022.

Source: Hong Leong Investment Bank Research - 8 Jul 2022