Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group, assess the lates labour market report from Malaysia.

Key Takeaways

“Malaysia’s labour market conditions remained broadly stable in Dec 2022, with both unemployment rate and labour force participation rate holding unchanged at 3.6% and 69.8% respectively. This was aligned with full operation of all economic activities for nearly one year amid persistent scaring effects of the COVID-19 pandemic on the economy. For the full year of 2022, unemployment rate averaged 3.9% (2021: 4.6%), remaining above the pre-pandemic 2015-2019 long term average of 3.3%.”

“Total employment recorded the smallest gain in 17 months of 21.8k or 0.1% m/m to 16.13mn in Dec (Nov: +27.1k or +0.2% m/m to 16.11mn), the highest level on record. The slower gain was mainly driven by all economic sectors, led by services and manufacturing sectors.”

“The latest performance of all labour market indicators continued to affirm our view of a slower recovery momentum in Malaysia’s labour market since Jul 2022. Although China’s reopening from 8 Jan 2023 has spurred optimism for Southeast Asia including Malaysia’s tourism sector and growth recovery this year, the impact may be more gradual in 1H23 amid capacity constraints and inflation risks. Taking this and other lingering economic headwinds into consideration as well as pending additional job-related initiatives from the 2023 budget that will be re-tabled on 24 Feb, we keep our year-end jobless rate forecast at 3.2% for 2023 (vs official est: 3.5%-3.7%, end-2022: 3.6%).”