Labour force participation reaches record high of 70.1 per cent in July
KUCHING: According to the research arm of Kenanga Investment Bank Bhd (Kenanga research), the Malaysian labour force participation has reached a record high of 70.1 per cent in July.
In an economic viewpoint report, the research arm reported that during the month of July, the number of active unemployed persons fell to 464,700 the lowest since April 2020 while the number of unemployed persons fell to 579,200, the lowest since February 2020.
Additionally, employment growth continued on its steady expansion path as it expanded for the 24th month straight at 0.2 per cent m-o-m in July of 16.34 million people, a new record high.
However, its growth has begun easing with labour force growth moderating to 0.1 per cent m-o-m in July from 0.2 per cent m-o-m in June, while new job creation eased slightly to 27.2k in July from 28,300 recorded in June.
Overall, the research arm opined that these figures suggest that the Malaysian labour market has gradually returned to its pre-pandemic levels.
In comparison, advanced economies like the US and Japan saw unemployment rates inching up as more people returned to find work.
In Japan, July unemployment
Nevertheless, the jobless rate remains below the Fed’s median estimate of 4.1 per cent for 2023, indicating that the labour market remains resilient to a higher interest rate environment.
Kenanga Research
rates expanded to 2.7 per cent as unemployed population rose by 110,000 while its job-to-applicants ratio fell to 1.29 from 1.30.
Meanwhile, US August unemployment rates surged to 3.8 per cent, the highest since Feb 2022, as 736k people entered the US job market while employment only increased by 222,000.
“Nevertheless, the jobless rate remains below the Fed’s median estimate of 4.1 per cent for 2023, indicating that the labour market remains resilient to a higher interest rate environment,” Kenanga Research shared.
Looking ahead, Kenanga Research guided that the local labour market has continued to remain resilient and robust despite the negative impacts of a global economic slowdown, higher interest rate environment and slower than expected GDP performance in 2Q23.
It opined that Malaysia’s labour market will likely remain robust for the remainder of the year and forecast unemployment rate for 2023 to be at 3.5 per cent and fall further to 3.3 per cent in 2024.
“This is evidenced by sustained m-o-m employment growth which could be attributed to various measures by the federal government, including the MADANI Career Incentive, as well as a pick-up in tourism activities amid higher tourist arrivals and spending,” the research arm detailed.
“Notably, MyFutureJobs statistics recorded 119,161 active job vacancies in August compared to 33,967 in July, reflecting robust monthly hiring activities. Meanwhile, youth unemployment fell to 10.9 per cent, the lowest level since February 2020,” it added.
The research arm also said it retained its 2023 GDP growth forecast at 3.5 to four per cent, with growth mainly contributed by domestic demand and expansion in the services sector.