Kenanga Research & Investment

Malaysia Labour Market - Steady unemployment rate of 3.2% in November; to further improve in 2025

kiasutrader
Publish date: Mon, 13 Jan 2025, 09:41 AM
  • The unemployment rate remained at 3.2% (Oct: 3.2%) for the fourth straight month, the lowest since January 2020
    • Unemployment numbers fell by 0.9% MoM (Oct: -0.7%), extending a 40-month decline and the fastest pace in three months.
    • In absolute terms, the number of unemployed persons declined to 546.7k (Oct: 551.4k), gradually approaching the pre-pandemic level (Feb-20:
    • Meanwhile, the actively unemployed fell to 436.2k (Oct: 440.0k), the lowest since March 2020 (422.9k), with those unemployed for less than three months decreasing to 272.9k (Oct: 273.7k).
  • Employment growth steady at 0.2% MoM (Oct: 0.2%), led by continued strength in the services sector
    • By sector: according to the Department of Statistics (DOSM), the number of employed persons in the services sector continued to increase, mainly in wholesale & retail trade, transportation & storage activities and information & communication activities. Similarly, the number of employed in manufacturing, construction, mining & quarrying, and agriculture also expanded.
    • By employment status: sustained increase in employees (0.1% MoM; Oct: 0.1%), while own account workers expanded (0.4%; Oct: 0.3%) to a 17-month high. However, employers moderated (0.2%; Oct: 0.4%), while unpaid family workers continued to decline (-0.2%; Oct: -0.1%) for the second straight month.
  • Labour force participation rate remained at a record high (70.5%; Oct: 70.5%) for the third straight month
    • Labour force (0.14% MoM; Oct: 0.14%) recorded a steady expansion, adding 24.9k persons (Oct: 24.6k), reaching 17.29m persons, while those outside the labour force declined (-0.02%; Oct: -0.02%) further to 7.23m.
  • Lower unemployment rate recorded among advanced economies
    • US: fell in December (4.1%; Nov: 4.2%) driven by strong job growth and reduced job losses.
    • Japan: unchanged in November (2.5%; Oct: 2.4%), with job availability ratio remained at 1.25 (Oct: 1.25)
  • The unemployment rate is likely to settle at 3.3% in 2024 (2023: 3.4%), aligning with our forecast. We have revised the 2025 unemployment rate to 3.1% from the 3.2% projected earlier, banking on steady domestic growth
    • Unemployment rate averaged 3.3% in the first 11 months, with 4Q24 likely to record the lowest quarterly unemployment rate since 4Q19, signalling a return to pre-pandemic levels.
    • 2025 Outlook: Our revised unemployment rate forecast of 3.1% for 2025 is backed mainly by a steady domestic demand growth, robust employment expansion in the services and manufacturing sectors, and the realisation of approved investments. Federal government spending, including a record RM421.0b in Budget 2025, and the expectation of higher tourist arrivals this year, ahead of the Visit Malaysia Year 2026, are expected to boost hiring.
    • GDP Growth: The 2024 GDP growth forecast remains at 5.0% (2023: 3.6%). Growth is projected to moderate slightly to 4.8% in 2025, reflecting the base effect and rising external uncertainties amid heightened geopolitical tensions and normalising economic activities.

Source: Kenanga Research - 13 Jan 2025

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