● The unemployment rate edged down to 4.7% in July (Jun: 4.9%), suggesting a pickup in the labour market recovery

- Unemployed persons (-3.6% MoM; Jun: -6.4%): reduced for the second straight month as employers began to hire new staff under the Recovery Movement Control Order (RMCO) phase. However, 745.1k (Jun: 773.2k) people remain unemployed, which is much higher than 2019 average of 518.9k.

● Job growth continued to improve but moderated slightly (0.6% MoM; Jun: 0.7%), while labour force growth remained stable at 0.3% MoM (Jun: 0.3%)

- Labour force: rose to a 4-month high (15.82m persons; Jun: 15.76m).

- New job creation: eased to a two-month low (83.2k; Jun: 102.3k).

● Labour force participation remains steady at 68.1% (Jun: 68.1%)

- People outside of the labour force charted a muted growth (0.0% MoM; Jun: 0.1%) amid the government staff hiring incentive programme, suggesting a decent take up rate of job seekers.

- Meanwhile, job vacancies continued to surge in June (178.1% MoM; May: 176.5%) to 31.8k as the government further eased the restrictions under the MCO with the share of elementary positions shrank to a near 15-year low (share: 39.8%; May: 46.0%).

● Improving labour market performance globally

- US: declined for the fourth straight month (8.4%; Jul: 10.2%) as companies continued to rehire some of the workers they dismissed during the COVID-19 pandemic.

- KR: unexpectedly fell to 3.2% in August (Jul: 4.2%), sharpest monthly drop since 1999 as more people stopped looking for job amid the COVID-19 resurgence.

● 2020 unemployment rate forecast revised down to 4.2% from 4.7% (2019: 3.3%) despite sluggish economic growth outlook (GDP: -5.9%; 2019: 4.3%)

- Malaysia employment market is expected to continue its positive progress during the COVID-19 pandemic recovery phase which is now extended until Dec 31st. According to the Employment Insurance System, there is only 9.3k people who applied for the loss of employment benefit in August (July: 16.7k), reflecting a nascent recovery in the job market. Nevertheless, risk of COVID-19 resurgence and uncertain demand condition could weigh on the recovery.

Source: Kenanga Research - 14 Sept 2020