UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest labour market results in the Malaysian economy.

Key Takeaways

“Malaysia’s labour market conditions continued to improve for five months in a row in Dec 2021, with the unemployment rate inching lower to a 21-month low of 4.2% (from 4.3% in Nov), matching our year-end estimate. Both the labour force participation rate and hiring also breached a new record high at 69.0% (Nov: 68.9%) and 15.65m (Nov: 15.61m) respectively.”

“The record high employment was thanks to higher employment in services, manufacturing, and construction sectors. This fully cushioned the contractions in agriculture, and mining & quarrying sectors since Aug 2020.”

“We reiterate our view that Malaysia’s labour market recovery remains on track. However, the momentum of gains may soften in 2022. Our channel checks suggest ongoing challenges posed by the pandemic to businesses particularly related to rising costs amid a cautious outlook. Rising vaccination rates (including booster doses) and ongoing government policy support are key to underpin the labour market recovery. We maintain our end-2022 jobless rate forecast at 3.6%.”