The labour market continued to strengthen in Sep. Employment growth continued at a steady pace (+0.2% MoM; Aug: +0.2% MoM), driven by the services, manufacturing and construction sectors. Meanwhile, the labour force also recorded steady expansion (+0.2% MoM; Aug: +0.2% MoM), while unemployed persons continued to decline (-1.1% MoM; Aug: -1.4% MoM), albeit at a slower pace. The unemployment rate inched lower to 3.6% (Aug: 3.7%).

DATA HIGHLIGHTS

The labour market continued to strengthen in Sep, amid the improving domestic economy and revival of tourism-related industries. The number of unemployed persons continued to decline on a MoM (-1.1%; Aug: -1.4%) and YoY basis (-17.1%; Aug: -18.3%), albeit at a slower pace. Consequently, the unemployment rate inched lower to 3.6% (Aug: 3.7%).

In terms of unemployment duration, the share of unemployed for less than 3 months (60.2%; Aug: 60.0%) increased, while the share without a job for longer durations of 6 to less than 12 months (11.7%; Aug: 11.8%) and more than 1 year (6.3%; Aug: 6.4%) decreased. Meanwhile, the share of unemployed for 3 to less than 6 months was unchanged (21.8%; Aug: 21.8%).

Employment growth continued at a steady pace on a MoM (+0.2%; Aug: +0.2%) but softened on a YoY basis (+3.8%; Aug: +4.2%). Growth continued to be driven by upward employment in the services, manufacturing and construction sectors, while employment in the agriculture and mining sectors remained on a downtrend. In the services sector, growth mainly stemmed from higher employment in food & beverages services, wholesale & retail trade, and transport & storage activities. In terms of employment status, employees growth softened (+0.1% MoM; Aug: +0.2% MoM) while own account workers growth picked up pace (+0.7% MoM; Aug: +0.6% MoM). Meanwhile, the number of employed persons who were temporarily not working decreased to 80.1k persons (Aug: 81.3k persons).

The labour force registered steady expansion on a MoM basis (+0.2%; Aug: +0.2%) but slightly slowed on a YoY basis (+2.9%; Aug: +3.1%). The labour force participation rate was unchanged at 69.7% (Aug: 69.7%).

Separately, SOCSO reported a small decrease in loss of employment (LOE) in Oct (2.7k; Sep: 2.8k) concentrated mostly in manufacturing, professional & technical, and wholesale & retail industries. Selangor (33.7%) and KL (28.5%) remained the two states with highest LOE concentration.

As of 14 Oct, the government approved wage subsidy applications totalling RM21bn 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 is expected to continue its positive recovery momentum in upcoming months, underpinned by robust domestic demand coupled with the better income prospects, expansion in primary sectors, and uptick in tourism-related activities towards the year-end. We maintain our expectation for BNM to increase policy rate to 3.25% by 1H 2023.

Source: Hong Leong Investment Bank Research - 9 Nov 2022