● The unemployment rate eased to 4.9% in June (May: 5.3%) thanks mainly to the Recovery Movement Control Order (RMCO)

− Unemployed persons (-6.4% MoM; May: 6.1%): fell sharply on the impact of economic reopening as the nation enters RMCO from 10 June until 31 August. However, the total unemployed persons remained high, albeit declining (773.2k; May: 826.1k).

● Employment rebounded sharply (0.7% MoM; May: -0.3%) matching a level in August 2016 and exceed a pace of recovery in labour force growth (0.3% MoM; May: 0.0%)

− Labour force: increased marginally (15.76m persons; May: 15.71m).

− New job creation: jumped to a 58-month high (102.3k; May: -45.5k).

● Labour force participation expanded marginally back to April’s level (68.1%; May: 68.0%)

− Attributable to softer growth of outside the labour force (0.1% MoM; May: 0.6%), signalling a recovery in the number of job seekers.

− Job vacancies growth surged to a 45-month high in May (176.5% MoM; Apr: -91.7%). In absolute terms, it grew to 11.5k, though it remains below the pre-pandemic level. Meanwhile, the share of low-skilled expanded in May to 46.0% (Apr: 43.9%).

● Jobless rate in advanced economies eased on gradual economic recovery

− US: softened for the third straight month (10.2%; Jun: 11.1%) as employers added about 1.8m jobs to their payrolls.

− JP: eased after registered a three-year high in the previous month (2.8%; May: 2.9%), but the availability of jobs declined.

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

− While there are signs of improvement in the labour market in line with the gradual economic reopening, the downside risk remains on fears of a new wave of COVID-19 infections, which could hamper the recovery of domestic demand and business operations, subsequently threatens the overall economic recovery.

− Nevertheless, we believe the rise of the unemployment rate is expected to be softened in the 2H20 due to the impact of unprecedented fiscal and monetary measures to boost economic activities and encourage hiring.

Source: Kenanga Research - 10 Aug 2020