● The unemployment rate held steady for the fifth straight month in January (3.6%; Dec 22: 3.6%) and remained the lowest since February 2020

- Unemployed persons (-0.6% MoM; Dec 22: -0.2%): It declined for eighteen straight months and at the fastest pace in four months, reflecting a continued improvement in the domestic labour market.

- Consequently, the number of unemployed persons fell to 596.1k (Dec 22: 599.6k), the lowest since February 2020. Similarly, the actively unemployed fell to 481.6k (Dec 22: 484.2k), the lowest since April 2020 (459.8k).

● Employment continued to expand for eighteen straight months (0.2% MoM; Dec 22: 0.1%), bringing total employment to 16.16m people, a record high

- Labour force: growth expanded (0.2% MoM; Dec 22: 0.1%), with the total labour force rising to a record high of 16.76m persons (Dec 22: 16.73m).

- New job creation: expanded (28.9k; Dec 22: 21.8k) to a three-month high.

● Labour force participation rate remained unchanged (69.8%; Nov: 69.8%) for the third straight month and remained the highest recorded since the data was made available in January 2015

- The number of those outside the labour force edged down slightly (-0.02% MoM; Dec 22: 0.05%) to 7.238m as more people returned to seek employment.

● Mixed labour market conditions among regional economies

- JP: edged down (Jan: 2.4%; Dec 22: 2.5%), the lowest since February 2020, as the number of employed far exceeded unemployed people.

- AU: expanded (Jan: 3.7%; Dec 22: 3.5%) to an eight-month high amid the impact of higher interest rates.

● 2023 unemployment rate forecast revised slightly to 3.5% from 3.3% (2022: 3.8%)

- The revised forecast reflects the stickier-than-expected labour market conditions given that the unemployment rate has somewhat stayed at a 3.6% level for five straight months or since September 2022. Though the recovery appears to be sustained due to an increase in domestic economic activities, we expect the momentum towards the end of the year to be slower than previously anticipated. Besides, youth unemployment remains high at 11.5% (Dec 22: 11.8%), albeit improving, but still above the pre-pandemic level (Jan 20: 10.0%).

- Nevertheless, we retained our 2023 GDP growth forecast at 4.7% (2022: 8.7%), underpinned by resilient domestic demand, an increase in tourist arrivals and foreign direct investment, as well as the implementation of the federal government projects under the revised Budget 2023.

Source: Kenanga Research - 10 Mar 2023