Julia Goh, Senior Economist at UOB Group, and Loke Siew Ting, Economist at UOB Group, discuss the recent improvement in the Malaysian labor market report.
“Malaysia’s unemployment rate fell for the fourth month in a row in May, to 4.5 percent (down from 4.6 percent in April), the lowest since March 2020. During the month, a statewide Movement Control Order (MCO 3.0) was re-implemented, but before a more stringent lockdown (FMCO) in June and Enhanced MCO (EMCO) in select areas, including the Klang Valley, in July. The number of unemployed people declined 14.6 thousand or 2.0 percent m/m to 728.1 thousand (Apr: -10.5 thousand or -1.4 percent m/m to 742.7 million people), while the labor market participation rate fell to 68 percent “percent (68.6 percent in April).”
“In May, total employment reached an all-time high of 15.37 million people, up 18.8 thousand or 0.1 percent from 15.35 million people in April (+22.7 thousand or 0.1 percent m/m). Higher employment in the services and manufacturing industries propelled the hiring trend.”
“Despite reaching a 14-month low in May, the national unemployment rate is higher than pre-pandemic levels. In fact, given a more strict lockout applied and a broader list of firm closures in June-July, we predict the total unemployment rate to shift gears and retrace upward in the coming months. Any prolongation of the FMCO/EMCO beyond mid-July, increased pandemic risks, and delays in meeting the National Recovery Plan’s vaccination rate objective will stymie labor market and economic recovery. We keep our unemployment rate projection for 2021 at 4.5 percent (BNM forecast: 4.0 percent -5.0 percent) “percent; by the end of 2020, it will be 4.8 percent).”/n
