UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest jobs report in Malaysia.
Key Takeaways
The national unemployment rate and labour force participation rate held unchanged at 3.5% and 70.0% respectively in May, signaling stable labour market conditions. Labor conditions are still some way from tightness as the number of unemployed persons and workers outside the labour force remained higher than pre-pandemic amid constrained wage growth.
Total employment hit an all-time high of 16.28mn in May (Apr: 16.25mn) following positive monthly gains since Aug 2021. Hiring was broad-based across all economic sectors, led by the services industry particularly in food & beverage services, wholesale & retail trade, and information & communication activities. The employment-to-population ratio inched up to 67.6% (from 67.5% in Apr), marking a fresh record high, which indicates the ability for Malaysia’s growing economy to create employment.
We maintain our 2023 year-end unemployment rate forecast at 3.2% (BNM est: 3.3%, end-2022: 3.6%). Renewed expectations of tighter monetary and financial conditions in the advance economies coupled with a slower post-pandemic economic recovery in China have raised concerns about a more subdued global demand and growth outlook for 2H23 and 2024. Should conditions slow further in the next few months, this could delay reaching full employment by year-end.
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