Economists say the unemployment rate for 2023 will likely average at 3.5%, an improvement from the 3.8% recorded in 2022.
PETALING JAYA: Despite the anticipated slower economy, the labour market is expected to improve in the coming months, sustained by the still-resilient growth dynamics.
According to economists, the unemployment rate for 2023 will likely average at 3.5%, an improvement from the 3.8% recorded in 2022.
Data from the Statistics Department on Monday showed that Malaysia’s unemployment was steady at 3.5% in May 2023 for the fourth consecutive month, as the number of unemployed persons continued to decline, falling by 8.3% year-on-year (y-o-y) or 584,600 persons.
Concurrently, the services sector continued to register a positive trend, particularly in food and beverage,wholesale and retail trade; and information and communications industries. Similar trends were observed in the manufacturing, construction, mining and quarrying, and agriculture sectors.
Overall, the labour market was poised to maintain its stability in the forthcoming months, buoyed by the still-resilient domestic economy, TA Research said.
“This positive trajectory is expected to generate an increased demand for labour, serving as a vital driver for the ongoing stabilisation of the economy,” the brokerage explained in its report yesterday.
It expected the jobless rate to reach 3.4% by year-end, thus averaging at 3.5% for 2023.
“With the stabilisation of the labour market and the sustained growth of the economy, Malaysia presents promising investment opportunities within its labour market.
“This upward trajectory not only instils confidence among potential investors, but also acts as a catalyst for the emergence of new business prospects,” TA Research said.
“As a result, the favourable conditions significantly contribute to the growth and overall development of the country,” it added.
Hong Leong Investment Bank (HLIB) Research noted that labour demand remained favourable, as evidenced by the steady expansion of the labour force, with a growth of 2% y-o-y in May, as in the preceding month.
“The labour market situation is anticipated to further improve in upcoming months in view of Malaysia’s sustained economic growth trajectory, albeit at a more moderate pace,” HLIB Research wrote in its report.
“The ongoing recovery in tourism-related industries following the uptick in tourist arrivals should also lend support to the labour market and in turn, encourage consumer spending,” it added.
HLIB Research maintained its 2023 gross domestic product (GDP) growth forecast at 4.5% y-o-y.
Similarly, Maybank Investment Bank (Maybank IB) Research also projected a GDP growth of 4.5% y-o-y this year for the country.
In 2022, Malaysia’s GDP expanded 8.7% y-o-y.
Maybank IB Research also maintained its 2023 unemployment rate forecast at 3.5% y-o-y.
“Amid our forecast of slower real GDP growth, our annual jobless rate forecast implies monthly jobless rate to largely move sideways during the course of 2023 after trending down in 2022,” it said, pointing to a rate of 4.2% y-o-y in January 2022 to 3.6% y-o-y in September 2022-January 2023.
