Unemployment rate set to rise to 3.4% this year

Slowdown in the manufacturing sector is expected to persist in 1H20 affecting the labour market


MALAYSIAN unemployment rate is expected to inch up to 3.4% this year dragged by softer economic climate, compared to 3.3% recorded last year.

According to Kenanga Investment Bank Bhd’s (Kenanga IB) labour market report, the research firm foresees the slowdown in the manufacturing sector to persist in the first half of 2020 (1H20) on the back of prolonged trade war, heightened risk of geopolitical tension in the Middle East and the pro-democracy rally in Hong Kong.

“We maintain our ‘Cautious’ outlook as manufacturing slowdown may persist in 1H20 on the back of prolonged trade war and heightened risk of geopolitical tension in the Middle East, as well as the pro-democracy rally in Hong Kong,” Kenanga IB stated in its labour market report yesterday.

Nevertheless, the sector is expected to gradually recover in 2H20 attributed by a potential upturn in the tech cycle, while government initiatives to boost employment is expected to support the employment growth.

The unemployment rate remained stable at 3.2% for two straight months in November with 513,900 people jobless compared to 512,100 in October 2019.

Labour force participation rate grew by 0.1% to 68.8%, underpinned by job vacancies that rose after two months of contraction, reaching 804,000 in October predominantly comprised of low-skilled jobs, while those outside of the labour force charted a muted growth.

But, labour force and employment growth grew at the pace of 0.3% month-on-month (MoM) to 15.83 million people compared to 15.78 million people in October.

Some 490,400 jobs were created in the period — the largest in seven months — with hiring in the manufacturing sector increasing 0.2% MoM.

The global unemployment rate has been stable with major markets such as the US maintaining the lowest rate in nearly five decades at 3.5%, in spite of a downturn in the manufacturing sector’s employment due to the impact of China-US trade war.

Meanwhile, Japan recorded its first improvement in four months at 2.2% in November compared to 2.4% in the previous month.