The labour market continued to recover in Aug, albeit at a slower pace. Employment grew moderately (+0.2% MoM; Jul: +0.3% MoM), mainly supported by higher employment in the services, manufacturing and construction sectors. Meanwhile, the labour force grew at a steady pace of +0.2% MoM (Jul: +0.2% MoM), while unemployed persons fell at a slower pace of -1.4% MoM (Jul: -1.6% MoM). The unemployment rate held steady at 3.7% (Jul: 3.7%).

DATA HIGHLIGHTS

The labour market continued to recover in Aug, albeit at a slower pace, as the country enters its fifth month of the transition into endemicity. The decline in the number of unemployed persons slowed on both a MoM (-1.4%; Jul: -1.6%) and YoY basis (-18.3%; Jul: -20.2%). Consequently, the unemployment rate held steady at 3.7% (Jul: 3.7%).

In terms of unemployment duration, the share of unemployed for less than 3 months (60.0%; Jul: 59.5%), as well as for longer durations of 6 to less than 12 months (11.8%; Jul: 11.6%) increased. Meanwhile, the shares without a job for durations of 3 to less than 6 months (21.8%; Jul: 22.4%) and more than 1 year (6.4%; Jul: 6.6%) ticked lower.

Employment growth continued at a softer pace on a MoM (+0.2%; Jul: +0.3%) and YoY (+4.2%; Jul: +4.5%) basis. Growth continued to be supported by the services, manufacturing, and construction sectors. In the services sector, growth was driven mainly by higher employment in food & beverages services, wholesale & retail trade, as well as administrative & support service activities. Meanwhile, employment in the agriculture and mining sectors remained on a downtrend. In terms of employment status, employees growth rose at a steady pace (+0.2% MoM; Jul: +0.2% MoM), while own account workers rose at a slower pace (+0.6% MoM; Jul: +0.8% MoM). Meanwhile, the number of employed persons who were temporarily not working decreased to 81.3k persons (Jul: 83.7k persons).

The labour force recorded continued expansion on a MoM (+0.2%; Jul: +0.2%) and YoY basis (+3.1%; Jul: +3.3%), albeit at a slightly softer pace, in line with the growing demand for labour. Following this, the labour force participation rate inched higher to 69.7% (Jul: 69.6%).

Separately, SOCSO reported a slight increase in loss of employment (LOE) in Sep (2.8k; Aug: 2.1k) concentrated mostly in manufacturing, and wholesale & retail industries. KL (27.1%) and Selangor (21.8%) remained the two states with highest LOE concentration.

As of 9 Sep, the government approved wage subsidy applications totalling RM20.96bn under its five wage subsidy programmes (PSU), thus maintaining the employment of 2.96m employees, amounting to 17.8% of total labour force.

HLIB’s VIEW

The labour market situation is anticipated to further improve in upcoming months, following the rising demand for labour coupled with better income prospects spurred by the recovering economy. The reopening of international borders and expected arrival of foreign workers into the country are also expected to aid in relieving the remaining manpower shortages. We maintain our 2022 GDP forecast at +6.5% YoY.

Source: Hong Leong Investment Bank Research - 12 Oct 2022