● The unemployment rate fell to 3.5% in February (Jan: 3.6%), the lowest since the COVID-19 pandemic hit in March 2020, indicating a continued recovery in the labour market conditions

- Unemployed persons (-0.7% MoM; Jan: -0.6%): Declined for nineteen straight months and at the fastest pace in five months, reflecting robust hiring activities during the month.

- Consequently, the number of unemployed persons fell to 591.9k (Jan: 596.1k), the lowest since February 2020. Similarly, the actively unemployed fell to 475.5k (Jan: 481.6k), the lowest since April 2020 (459.8k).

● Employment continued to expand for nineteen straight months at a steady pace (0.2% MoM; Jan: 0.2%), bringing total employment to 16.19m people, a record high

- Labour force: growth sustained (0.2% MoM; Jan: 0.2%), with the total labour force reaching a record high of 16.78m persons (Jan: 16.76m).

- New job creation: increased (30.0k; Jan: 28.9k) to a five-month high.

● Labour force participation rate inched up (69.9%; Jan: 69.8%) to a record high

- The number of those outside the labour force continued to narrow (-0.02% MoM; Jan: -0.02%) to 7.237m as more people returned to find work.

● Mixed labour market conditions among advanced economies

- US: fell in March (3.5%; Feb: 3.6%) to a two-month low as nonfarm payroll employment rose by 236.0k.

- JP: increased in February (2.6%; Jan: 2.4%) to a four-month high, as the job availability ratio dropped 0.01 point to 1.34, indicating 134 job openings for every 100 people seeking work.

● 2023 unemployment rate forecast retained at 3.5% (2022: 3.8%)

- We remain cautious about the recovery in the labour market conditions though the labour market has demonstrated a sustained recovery due to an increase in domestic economic activities amid a gradual pick up in the tourism-related sector. This is likely due to the prospect of a global economic slowdown that could largely weigh on the export-related industries. However, we believe various policy support to further reduce the unemployment rate, such as opening up 19,000 vacancies for teachers, 1,500 new appointments for the healthcare sector and 50,000 job placement opportunities via the Malaysian Short-Term Employment Programme (MySTEP).

- Likewise, we maintain our 2023 GDP growth forecast at 4.7% (2022: 8.7%), as we expect domestic demand to remain resilient amid improvement in household income backed by a recovery in the tourism sector and increased foreign direct investment, as well as the implementation of the government projects under the revised Budget 2023.

Source: Kenanga Research - 11 Apr 2023