Malaysia: Good news from the employment report – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the recent labour market report in Malaysia.

Key Quotes

“Malaysia’s unemployment rate eased further to a 7-month low of 4.6% in Apr (from 4.7% in Mar), prior to the re-imposition of a nationwide Movement Control Order (MCO 3.0) in May and a nationwide full lockdown (FMCO) in Jun. The number of unemployed people dropped by 10.5k or 1.4% m/m to 742.7k (Mar: -24.3k or -3.1% m/m to 753.2k), while the labour force participation rate remained at 68.6%.”

“Total employment hit a new high with gains of 22.7k or 0.1% m/m to 15.35m persons in Apr (Mar: +58.7k or +0.4% m/m to 15.33m). The hiring momentum was led by higher employment in services, manufacturing and construction sectors, while both the agriculture and mining & quarrying sectors still recorded lower employment in Apr.”

“Following the adverse impact of MCO 3.0 and FMCO with the closure of all non-essential economic and services sectors as well as 60% business operating capacity for essential sectors allowed to operate, we expect the overall unemployment rate to retrace higher in May-Jun. Any extension of the FMCO post 14 Jun and the phase two of the virus curbs is expected to pose further challenges to the labour market. Given heightened pandemic risks and latest tightening of containment measures, we raise our 2021 year-end unemployment rate forecast to 4.5% (from 4.0% previously; BNM forecast: 4.0%-5.0%; end-2020: 4.8%).”