Kenanga Research & Investment
Malaysia Labour Market - Unemployment rate fell to 3.3% in November on a steady employment growth
- The unemployment rate edged down to 3.3% in November (Oct: 3.4%), the lowest since January 2020, indicating that the labour market has improved and returned to the pre-pandemic level
− Unemployed persons (-0.3% MoM; Oct: -0.5%): extending its decline for 28 months, but the pace slowed to a three-month low.
− In absolute terms, the number of unemployed persons fell to 569.2k (Oct: 570.9k), the lowest since February 2020 (525.2k). Additionally, the actively unemployed fell to 454.5k (Oct: 457.2k), the lowest since March 2020 (422.9k).
- Employment growth expanded for 28 months and at a steady pace (0.2% MoM; Oct: 0.2%)
− The rise in employment is mainly attributable to the increased hiring in the services sector, particularly in information & communication, food & beverage services, and transportation & storage activities. Similarly, the manufacturing, construction, and mining sectors also contributed to the expansion.
- Labour force participation rate remained at a record level (70.1%; Oct: 70.1%) for the fifth straight month as the total labour force increased slightly higher than the total working population
− Labour force: growth expanded (0.2% MoM; Sep: 0.1%) to a five-month high, with the total labour force reaching a record high of 17.0m persons.
- Stable unemployment rate across advanced economies
− US: remains unchanged in December (3.7%; Nov: 3.7%), with the number of unemployed persons staying at 6.3m.
− Japan: unchanged in November (2.5%; Oct: 2.5%), with the job availability ratio edged down to 1.28.
- Average unemployment rate for 2023 is likely to settle at 3.4%, slightly lower than our forecast of 3.5% (2022: 3.8%) and is projected to reduce further to an average of 3.3% in 2024
− The labour market conditions have demonstrated a steady expansion, as reflected by a steady decline in the unemployment rate. This is expected to be sustained in the near term, mainly benefiting from improving international markets, particularly China's post-pandemic recovery and the influx of tourists. Robust domestic demand, on the back of resilient household spending amid the upcoming festive season, is also expected to support the hiring activities.
− That said, we expect the labour market to continue its robust performance in the near term and throughout 2024, with the unemployment rate to average at 3.3%, barring unexpected and economically destructive events. This outlook is also associated with further economic improvements, with a projected 2024 GDP growth of 4.9%, from an estimated range of 3.5% - 4.0% in 2023 (2022: 8.7%).
Source: Kenanga Research - 11 Jan 2024
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