The unemployment rate edged down to 3.2% in January after increasing marginally at 3.3% in December 2019

• Unemployment rate: Back to its November level (3.2%), reflecting a slowing economic activity.
• Unemployment rate (seasonally adjusted): Similarly eased to 3.2% from 3.3% in the preceding month.
• Unemployed persons (-1.0% MoM; Dec: 0.6%): first contraction in three months, bringing the total unemployed persons to 511.7k (Dec: 517.0k), the lowest since May 2018.

Growth in labour force and employment grew at the same pace of 0.2% MoM

• Labour force: 15.83m persons (Dec: 15.80m), its highest since the data series began in January 2015.
• New jobs creation: jumped to 31.6k after a sudden contraction in the preceding month (-29.0k).
• Manufacturing sector: employment registered the best monthly gain (1.7% MoM; Dec: -0.1%) after contracting in the previous month, while payroll dropped by -2.1% MoM in January (Dec: 7.5%).

Labour force participation remains steady at 68.9% (Dec: 68.9%)

• Mainly due to further contraction in growth of those outside the labour force (-0.01% MoM; Dec: -0.6%).
• On the other hand, job vacancies declined further (-16.4%; Nov: -7.1%) to 62.4k in December with the share of elementary positions rises to a 12-month high (73.8%; Nov: 71.7%).

Stable unemployment rate globally

• US: jobless rate edged down to 3.5% in Feb (Jan: 3.6%) matching its 50-year record low in Dec (3.5%).
• KR: first improvement in six months (3.3%; Jan: 4.0%).

The unemployment rate is projected to edge up in 2020 to 3.5% (2019: 3.3%) amid a sluggish economic growth outlook for this year (3.1%; 2019: 4.3%)

• The overall trend remains dismal as manufacturing PMI fell to a 5-month low in February as export orders were hit by both demand and supply side headwinds. Following the supply chain shock and the rise of new COVID-19 cases in Malaysia, we expect it to have an adverse impact on the local job market. Consequently, we expect unemployment rate to gradually rise to 3.5% in 2020 on the back of the slowing business activity and domestic demand.
• Nonetheless, we expect the growth slowdown to last between three to six months, before it the economy gradually recover in the 2H20 on a delayed upturn in tech cycle, the impact of the fiscal stimulus and the possibility of COVID-19 containment.

Source: Kenanga Research - 16 Mar 2020