PETALING JAYA: Malaysia’s labour market remains robust with employment expanding across all sectors, while the unemployment rate held steady at 3.3% for the seventh consecutive month in May.
The labour market’s stable condition is set to support private consumption more so with civil servants set to enjoy wage increments this December and fresh withdrawals from the Employees Provident Fund’s new Account 3, according to Hong Leong Investment Bank (HLIB) Research.The research house, however, warned that consumers might be more cautious on their spending plans going forward, awaiting further fuel subsidy reforms by the government.
Latest data from the Statistics Department showed that employment grew by 1.8% year-on-year and 0.2% month-on-month (m-o-m) in May to take the total workforce to 16.58 million individuals.
The demand for labour was helped by increased tourism activity, improvements in the manufacturing sector and better trade performance, HLIB Research pointed out.
“The services sector continued to record a rise in employment, particularly in the wholesale and retail trade, food and beverage services and information and communication activities.
“The manufacturing, construction, mining and agriculture sectors also recorded an uptick in employment.
“To note, nearly two-thirds of total employment was concentrated in the services sector during the month,” the research house stated in a report on the local labour market.
This ensured the labour force participation rate stood unchanged at 70.3% in May compared to April.
Unemployment numbers, however, fell by 0.1% m-o-m, thus extending its 34-straight month of decline and at a faster pace in the past two months.
Kenanga Research added that in absolute terms, the number of unemployed persons in the local economy continued to decline to 566,100 in May as compared with 566,400 in April, and was slowly approaching the pre-pandemic level of 525,200 recorded in February 2020.
This suggested that the underlying economy and business activities remained in good health and would lead to sustained growth in the near term.
The research house expected an improvement in the unemployment rate towards the end of the year, given sustained expansion in the services sector activity in recent months, reinforced further by a gradual recovery in export-oriented manufacturing activities due to the upcycle in the tech sector.
“The ongoing progress of multi-year government infrastructure projects, as well as various policy support, also remained key factors driving the steady labour market for this year.
“The realisation of record approved investments worth RM329.5bil registered last year, as well as the recent RM83.7bil worth of investment approved in the first quarter, will further stimulate hiring activities in the coming months,” Kenanga Research said.
The research house had maintained its 2024 real gross domestic product (GDP) growth forecast of 4.5% to 5% compared with the real GDP growth of 3.6% in 2023.
