UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the recent improvement in the Malaysian labour market report.
Key Quotes
“Malaysia’s unemployment rate dipped for the fourth straight month to 4.5% in May (from 4.6% in Apr), marking the lowest level since Mar 2020. This came amid the re-implementation of a nationwide Movement Control Order (MCO 3.0) during the month, but before a more stringent lockdown (FMCO) in Jun and Enhanced MCO (EMCO) in several states including Klang Valley in July. The number of unemployed people fell 14.6k or 2.0% m/m to 728.1k (Apr: -10.5k or -1.4% m/m to 742.7m persons), while the labour force participation rate eased to 68.5% (Apr: 68.6%).”
“Total employment hit an all-time high at 15.37m persons in May, after gaining for the sixth consecutive month by 18.8k or 0.1% from 15.35m persons in Apr (+22.7k or +0.1% m/m). The hiring momentum was mainly driven by higher employment in the services and manufacturing sectors.”
“Despite the national jobless rate hitting a 14-month low in May, it remains higher than the prepandemic levels. In fact, we expect the overall unemployment rate to shift gear and retrace higher in the coming months given a more stringent lockdown imposed and broader list of business closures in Jun-Jul. Any extension of the FMCO/EMCO beyond mid-Jul, heightened pandemic risks, and delays in achieving vaccination rate target set under the National Recovery Plan would further hinder the labour market and economic recovery. We maintain our 2021 year-end unemployment rate forecast at 4.5% (BNM forecast: 4.0%-5.0%; end-2020: 4.8%).”