● The unemployment rate eased slightly to 4.5% in May (Apr: 4.6%) despite a surge in the COVID-19 cases

• Unemployed persons (-2.0% MoM; Apr: -1.4%): fell for the fourth straight month, and reducing the number of unemployed persons to 728.1k (Apr: 742.7k).

● Employment growth expanded for the sixth consecutive month (0.1% MoM; Apr: 0.1%) thanks to an upward trend in the services and manufacturing sectors

• Labour force: sustain expansion (16.098m persons; Apr: 16.094m) to a new record high.
• New job creation: expanded at a slower pace (18.8k; Apr: 22.7k).

● Labour force participation rate edged down (68.5%; Apr: 68.6%)

• Attributable to higher growth of the number of people outside the labour force (0.3% MoM; Apr: 0.2%) to 7.39m.

● Unemployment rate rise in the advanced economies

• US: unemployment rate edged up in June (5.9%; May: 5.8%) as the number of people out of work increased.
• JP: unemployment rate rose to a five-month high (3.0%; Apr: 2.8%) due to movement restrictions to fight COVID-19.

● 2021 unemployment rate forecast maintain at 4.3% (2020: 4.5%), but downside risks persist

• While the extended nationwide lockdown is expected to weigh on the labour market condition in the near term, we reiterate our view that the unemployment rate will improve by year-end in line with Phase 2 and 3 of the National Recovery Plan. Likewise, the labour market will be supported by the vaccination progress, ongoing sizeable fiscal packages, manufacturing sector expansion, and pent-up demand on the back of economic reopening.
• Of concern, the youth unemployment rate remains high. The unemployment rate of age-group 15 to 24 stood at 13.6% (Apr: 13.7%). The situation is worrisome and reflects the impact of the COVID-19 pandemic and its containment measures on the most vulnerable groups that have long struggled. Given the extended lockdown measures and the uncertainty over the pandemic, coupled with heightened domestic political issues, we anticipate youth unemployment to remain elevated in the near term.

Source: Kenanga Research - 9 Jul 2021