● The unemployment rate soared to 5.0% in April (Mar: 3.9%), the highest level since the end of the communist insurgency in Malaysia in 1989 as the labour market bear the brunt of government Movement Control Order (MCO) policy
- Unemployed persons (27.6% MoM; Mar: 16.2%): biggest jump since March 2001, bringing the total unemployed persons to 778.8k (Mar: 610.5k). The labour market has been devastated by the COVID-19 pandemic, with most businesses are forced to shut down for the whole month of April to prevent the spread of the coronavirus, resulting in a wave of layoffs and business shutdowns.

● Both labour force growth (-0.8% MoM; Mar: -0.2%) and employment growth (-0.7%; Mar: -2.0%) contracted further in April

- Labour force: dwindled to 15.71m persons (Mar: 15.84m).

- New jobs creation: fell significantly (-299.0k; Mar: -112.1k).

● Labour force participation eased for the third consecutive month, matching December 2017 level (68.1%; Mar: 68.6%)

- Mainly due to higher growth of those outside the labour force (1.5% MoM; Mar: 0.2%) as more people may have given up searching for work while others may have put their job searches on hold till things would improve in the near future.

- Meanwhile, job vacancies declined sharply in March (-44.0% MoM; Feb: 37.8%) to 50.1k due to the implementation of MCO on 18th March, with the share of elementary positions rises to a 3-month high (share: 67.3%; Feb: 66.1%).

● Mixed jobless rate globally

- US: eased to 13.3% in May (Apr: 14.7%) as US states have been easing lockdown restriction on businesses.

- KR: surged to 4.5% in May (Apr: 3.8%), the highest since January 2010.

● 2020 unemployment rate forecast revised to 4.7% from 4.1% (2019: 3.3%) on concerns over weak economic outlook ahead (GDP: -2.9%; 2019: 4.3%)

- Unemployment rate is expected to remain or increase from the current level in the next few months, as the economic pain cause by COVID-19 and MCO would persist till 2H20.

- Nevertheless, the RM8.8b allocated under the Short-term Economic Recovery Plan coupled with Ministry of Human Resources pro-active measures to add value to the workforce through up-skilling and re-skilling initiatives is expected to serve as a stop gap measure to limit the rise of the unemployment rate.

Source: Kenanga Research - 16 Jun 2020