Data Highlights

• The labour market continued its positive momentum, showing a consistent increase in employment nationwide. In May 2024, employment grew by 1.8% YoY and 0.2% MoM, bringing the total workforce to 16.58mn individuals.

• Increasing tourism activity during the month, along with its positive spillover effects on tourismrelated industries, has positively impacted the Malaysian labour market in terms of labour demand and supply. As a result, nearly two-thirds of employed individuals were concentrated in the services sector, which continued its upward trend, particularly in wholesale and retail trade, food and beverage services, and information and communication activities. Similarly, the manufacturing, construction, mining and quarrying, and agriculture sectors also recorded an increase in employment.

• The largest composition of employed persons remained in the ‘Employees’ category, comprising 75.1% of all employed individuals. This category saw an annual increase of 1.3%, equating to 157.3k new employees, bringing the total to approximately 12.45mn individuals. Similarly, the ownaccount workers category displayed a similar upward trend, with a YoY increase of 3.9% reaching a total of 3.05mn persons during the month, up from 2.94mn persons in May last year.

• Meantime, the number of unemployed persons continued its decline, decreasing by 3.2% YoY to 566.1k individuals (Apr24: 566.4k persons) which gradually approaching the pre-pandemic levels of 519k in 2019. On a monthly basis, the number of unemployed persons decreased by 0.1%. During the month, the jobless rate stood at 3.3%, the same rate seen in the previous month.

• The labour force (encompassing both employed and unemployed individuals) saw MoM expansion of 0.1% MoM or a YoY growth of 1.7% in May 2024, reaching a total of 17.15mn individuals. This growth suggests a healthy level of engagement in the labour market, with a labour force participation rate of 70.3%.

• Meanwhile, the number of individuals outside the labour force remained relatively stable on an annual basis, where there was a minimal MoM decline of 0.003%, totaling 7.23mn persons. Among those outside the labour force, 42.7% cited housework and family responsibilities as their primary reason for not participating in the labour market, followed closely by schooling and training at 41.4%.

• Our perspective: As economic and business activities continue to flourish, they have contributed to the creation of more jobs and income opportunities in the economy, which will encourage more labour participation in the market. In addition, the performance of the country's Leading Index (LI) also continued to improve, signalling that the Malaysian economy is expected to experience sustained growth in the near term. In April 2024, the LI rose by 4.3% YoY. Therefore, the labour market is expected to remain on a stable path in the upcoming months, backed by favourable economic growth as domestic activities flourish and external sector recovers.

• Our projections indicate a decrease in the jobless rate to 3.2% by year end. Both the labour force and employment figures will rise by 1.7% and 2.0%, respectively this year. Concurrently, unemployment is anticipated to drop by 5.2% throughout the year.

Source: TA Research - 11 Jul 2024