Malaysia’s unemployment rate fell to 3.2% in August, a 55-month low, reflecting a continued recovery in the labour market conditions amid steady economic recovery. The numbers fell by 0.9% MoM extending a 37-month decline and at the fastest pace in 23 months. In absolute terms, the number of unemployed persons fell to 558.5k, slowly approaching the pre-pandemic level. Meanwhile, the actively unemployed fell to 446.6k, the lowest since April 2020, while those unemployed for less than three months decreased further to 275.8k, Employment growth sustained driven by a strong services sector.
In terms of sectors, the number of employed persons in the services sector continued to increase, particularly in wholesale & retail trade, food & beverage services, and transformation & storage activities. Similarly, manufacturing, construction, mining & quarrying, and agriculture sectors also expanded. By employment status, sustained increase in employees, with the share of total employment remaining unchanged at 75.0%. Own account workers sustained, but the share expanded to 18.5%. Meanwhile, employers registered a strong MoM growth of a four-month high, while unpaid family workers fell for the sixth straight month.
Analysts at Kenanga Investment Bank have maintained their forecast despite the improvement in August’s unemployment rate, as the year-to-date average currently stands at 3.3%. They however still expect hiring activity to stay strong through the rest of the year backed by an increase in job openings, higher investment approved and robust expansion in the services sector thanks to increased tourist arrivals. In addition, the improvement in the manufacturing sector particularly the exportdriven industries led by electrical and electronics (E&E) is expected to support employment growth. Given the lower unemployment rate in August and stronger-than-expected high-frequency macro indicators, analysts project 3Q24 GDP growth of 5.3% (2Q24: 5.9%), bringing 2024 GDP growth forecast at 5.0% (2023: 3.6%).
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