The labour market continued to see improvement in Dec. Employment continued to expand (+0.1% MoM; Nov: +0.2% MoM), albeit at a softer pace, supported by higher employment in all sectors. The labour force also grew moderately (+0.1% MoM; Nov: +0.2% MoM), while number of unemployed persons continued to decline (-0.2% MoM; Nov: -0.2% MoM). The unemployment rate held steady at 3.6% (Nov: 3.6%).

DATA HIGHLIGHTS  

The labour market continued to see improvement in Dec following the uptick in economic and social activities, especially during the year-end. The number of unemployed persons continued to decline on both a MoM (-0.2%: Nov: -0.2%) and YoY (-12.8%; Nov: -13.5%) basis, albeit at a slower pace. Following this, the number of unemployed persons fell to a level below 600k persons for the first time since Mar 2020 at 599.6k persons (Nov: 600.9k persons). The unemployment rate held steady at 3.6% (Nov: 3.6%).  

In terms of unemployment duration, the share of unemployed for less than 3 months increased (60.9%; Nov: 60.6%), while the share without a job for longer durations of 3 to less than 6 months (21.5%; Nov: 21.6%) and 6 to less than 12 months (11.5%; Nov: 11.6%) inched lower. Meanwhile, the share of unemployed for more than 1 year stood unchanged (6.2%; Nov: 6.2%).  

Employment growth continued at a softer pace on both a MoM (+0.1%: Nov: +0.2%) and YoY (+3.1%; Nov: +3.2%) basis. Growth was supported by an increase in employment across all sectors; services, manufacturing, construction, agriculture, as well as mining. In the services sector, the upward trend mainly stemmed from wholesale & retail trade, food & beverage services activities, as well as information & communication activities. In terms of employment status, employees growth continued at a steady pace (+0.1% MoM; Nov: +0.1% MoM), while own account workers growth trended slightly lower (+0.4% MoM; Nov: +0.5% MoM).  

Similarly, the labour force also recorded continued expansion at a slower pace on both a MoM (+0.1%; Nov: +0.2%) and YoY basis (+2.4%; Nov: +2.5%). Following this, the labour force participation rate stood unchanged at 69.8% (Nov: 69.8%) during the month.  

Separately, SOCSO reported an increase in loss of employment (LOE) in Jan (4.0k; Dec: 3.2k) concentrated mostly in the manufacturing, transportation, and wholesale & retail industries. Selangor (39.5%) and KL (20.9%) remained the two states with the highest LOE concentration.

HLIB’s VIEW

Since the reopening of the economy and international borders, Malaysia’s labour market has shown a steady recovery. However, as unemployment rate remains at 3.6%, which is above the pre-Covid level of 3.3%, this indicates continued slack in the labour market. Going into 2023, we expect economic activity to grow at a slower pace of 4.0% as base effect wanes, pent-up demand eases and global demand moderates. Nevertheless, the reopening of China’s economy is expected to lend some support to export and tourism industry leading to expectations of continued gradual recovery in Malaysia’s labour market.

Source: Hong Leong Investment Bank Research - 10 Feb 2023