● The unemployment rate escalated further to 5.3% in May (Apr: 5.0%), the highest level since 1989

- Unemployed persons (6.1% MoM; Apr: 27.6%): the growth eased to a three-month low as more businesses were allowed to reopen on May 4 under the Conditional Movement Control Order (CMCO). However, the total unemployed persons remained massive (826.1k; Apr: 778.8k) as more businesses embarked on cost minimisation amid hampered demand condition.

● Employmentremained in contraction (-0.3% MoM;Apr: -2.0%), while labour force charted a muted growth(0.0%; Apr: -0.8%) in May

- Labour force: broadly unchanged (15.71m persons; Apr: 15.71m).

- New jobs creation: a smaller decline (-45.5k; Apr: -299.0k).

● Labour force participation eased for the fourth consecutive month to its lowest since November 2017 (68.0%; Apr: 68.1%)

- Due to an increase in those outside the labour force (0.6% MoM; Apr: 1.5%), signalling higher number of discouraged job seekers, amid the sombre economic environment.

- Job vacancies shrunk further in April (-91.7% MoM; Mar: -44.0%) to its lowest since over 15 years at 4.1k, with the share of low-skilled jobs narrowed to a 9-year low (share: 43.9%; Mar: 67.3%).

● Mixed jobless rate performance globally

- US: softened for the second straight month (11.1%; May: 13.3%) on more resumption of economic activities.

- JP: surged to its highest in three years (2.9%; Apr: 2.6%), but remained relatively low globally due to its aging population.

● 2020 unemployment rate retained at 4.7% (2019: 3.3%) on bleak economic outlook (GDP: -2.9%; 2019: 4.3%)

- Unemployment rate is expected to remain elevated in the near term as demand condition, particularly for the services sector, could remain depressed on worries over a potential resurgence in COVID-19 cases, despite further relaxation of the MCO.

- Nevertheless, the rise of the unemployment rate is expected to be softened in the 2H20 due to the impact of various measures deployed by the government to encourage hiring, retain jobs and reduce the cost of business financing.

Source: Kenanga Research - 15 Jul 2020