● The unemployment rate edged higher to 4.8% in November (Oct: 4.7%), as an initial recovery in the labour market continued to be hindered by the reinstatement of COVID-19 restrictions

- Unemployed persons (2.2% MoM; Oct: 1.5%): steepest increase in six months, bringing the total number of unemployed persons to 764.4k (Oct: 748.2k).

● Employment growth fell for the first time in six months (-0.1% MoM; Oct: 0.1%), whilst labour force growth was muted (0.0%; Oct: 0.2%)

- Labour force: increased marginally, reaching a new record high (15.961m persons; Oct: 15.955m).

- New job creation: declined for the first time since May 2020 (-11.0k; Oct: 14.0k).

● Labour force participation eased slightly (68.4%; Oct: 68.5%)

- The number of people outside of the labour force increased at the fastest rate in six months (0.4%; Oct: -0.2%), indicating a rise in discouraged workers, on renewed concerns surrounding COVID-19 restriction measures.

- Number of job vacancies surged to an 18-month high in October (98.5k), as it rose by 211.2% MoM (Sep: 24.3%), underpinned by a sharp increase in medium-skilled positions (294.8% MoM; 20.2%).

● Unemployment rate remained elevated globally

- US: unemployment rate remained unchanged in December (6.7%; Nov: 6.7%), even as non-farm payrolls decreased for the first time in eight months, indicating that employment recovery may be losing momentum.

- JP: decreased for the first time in five months in November (2.9%; Oct: 3.1%), as the government’s wage subsidy programme boosted the domestic tourism industry.

● 2020 unemployment rate would likely exceed our initial forecast of 4.5% (2019: 3.3%), as the labour market grapples with rising local COVID-19 cases

- The unemployment rate is expected to rise in the near term due to the continuing surge in domestic COVID-19 cases, which have led the government to impose a two-week Movement Control Order (MCO) in five major states and three federal territories, as well as conditional MCO (CMCO) and recovery MCO (RMCO) in the other remaining states starting on January 13.

- However, we expect the unemployment rate to gradually ease in 2021 (4.0%; previous forecast: 3.5%), particularly in 2H21, given the likelihood of a wider rollout of COVID-19 vaccines and a potential recovery of the manufacturing sector, in line with a projected rebound in 2021 GDP growth (6.1%; 2020F: -5.1%).

Source: Kenanga Research - 12 Jan 2021