The labour market continued to see improvement in Oct. Employment recorded steady expansion (+0.2% MoM; Sep: +0.2% MoM), driven by the services, manufacturing, construction and agriculture sectors. Meanwhile, the labour force also grew at a steady pace (+0.2% MoM; Sep: +0.2% MoM), while unemployed persons continued to decline (-0.5% MoM; Sep: -1.1% MoM), albeit at a slower pace. The unemployment rate held steady at 3.6% (Sep: 3.6%).

DATA HIGHLIGHTS

The labour market continued to see improvement in Oct, on the back of the strengthening domestic economy. The uptick in tourism-related activities has also helped boost demand for more labour. The number of unemployed persons continued to decline during the month on both a MoM (-0.5%; Sep: -1.1%) and YoY basis (-14.6%; Sep: -17.1%), albeit at a slower pace. The unemployment rate held steady at 3.6% (Sep: 3.6%) In terms of unemployment duration, the share of unemployed for less than 3 months (60.5%; Sep: 60.2%) increased, while the share without a job for longer durations of 3 to less than 6 months (21.7%; Sep: 21.8%) and 6 to less than 12 months (11.6%; Sep: 11.7%) inched lower. Meanwhile, the share of unemployed for more than 1 year was unchanged (6.3%; Sep: 6.3%).

Employment recorded steady expansion on a MoM (+0.2%; Sep: +0.2%) but slowed pace on a YoY basis (+3.4%; Sep: +3.8%). Growth continued to be driven by upward employment in services, manufacturing and construction sectors, amid an upturn in agriculture employment. In the services sector, growth mainly stemmed from higher employment in food & beverages services, wholesale & retail trade, as well as finance & insurance activities. Meanwhile, employment in the mining sector remained on a downtrend. In terms of employment status, employees growth continued at a steady pace (+0.1% MoM; Sep: +0.1% MoM), while own account workers growth softened (+0.4% MoM; Sep: +0.7% MoM). Meanwhile, the number of employed persons who were temporarily not working decreased to 79.8k persons (Sep: 80.1k persons).

The labour force continued to expand on both a MoM (+0.2%; Sep: +0.2%) and YoY basis (+2.6%; Sep: +2.9%) amid the better income prospects and recovering tourism industries, albeit at a softer pace. The labour force participation rate stood unchanged at 69.7% during the month (Sep: 69.7%).

Separately, SOCSO reported a slight increase in loss of employment (LOE) in Nov (2.8k; Oct: 2.7k) concentrated mostly in the manufacturing, wholesale & retail, as well as ICT industries. Selangor (30.4%) and KL (30.1%) remained the two states with the highest LOE concentration.

HLIB’s VIEW

The labour market is expected to further improve in coming months, underpinned by the continued strength in the domestic economy. Any new job-related initiatives that may be implemented in the re-tabled Budget 2023 could also provide additional support. However, the pace of recovery may see a slowdown going forward, in view of the rising global recessionary risks and weakening demand. The global tech down cycle has also caused E&E companies to scale back their production, which may slow hiring in the near term. We maintain our GDP forecast at +8.2% YoY for 2022.

Source: Hong Leong Investment Bank Research - 12 Dec 2022