● The unemployment rate edged up to 4.7% in October (Sep: 4.6%) as the reinstatement of COVID-19 prevention measures seems to threaten and possibly reverse the labour market recovery

− Unemployed persons (1.5% MoM; Sep: -0.6%): the total number of unemployed persons increased to 748.2k (Sep: 737.5k), marking the first rise in five months, halting the improvement seen since June due to the resurgence of local COVID-19 cases and reimplementation of Conditional Movement Control Order (CMCO) measures.

● Employment growth softened for the fifth consecutive month (0.1% MoM; Sep: 0.3% MoM), whilst labour force growth remained at the same level (0.2%; Sep: 0.2%)

− Labour force: increased marginally, setting a new record high (15.96m persons; Sep: 15.93m).

− New job creation: dropped further, reaching a five-month low (14.0k; Sep: 39.6k).

● Labour force participation edged higher (68.5%; Sep: 68.4%)

− The number of people outside of the labour force contracted marginally after rebounding last month (-0.2%; Sep: 0.1%), as people re-entered the job market despite renewed concerns about CMCO measures.

− Growth in active job postings surged to a four-year high (196.4% MoM; Aug: -32.1%), reaching 75.5k in September, with the share of elementary positions rose to a six-month high (share: 64.7%; Sep: 43.5%).

● Labour market improved in the US but generally weak elsewhere

− US: eased for the seventh consecutive month (6.7%; Oct: 6.9%), as employers added 245.0k jobs following the continued resumption of economic activity. Nevertheless, the pace of improvement in the labour market seems to be slowing.

− JP: unemployment rose to its highest level in over three years (3.1%; Sep: 3.0%), despite a newly launched wage subsidy programme aimed to protect jobs through the COVID-19 pandemic.

● 2020 unemployment rate forecast revised up to 4.5% from 4.2% (2019: 3.3%) as downside risks are elevated

− In the near term, the number of unemployed persons is expected to rise amid widespread restrictions on businesses to curb the spread of the COVID-19 infections. In addition, the recent surge in Malaysia COVID-19 cases are adding to the already heightened level of uncertainty in the job market, reinforcing fears that the economy is taking a turn for the worse. However, government’s decision to allow domestic travel bubbles and lift certain COVID-19 restrictions may partially help to lift the labour market.

Source: Kenanga Research - 14 Dec 2020