KUCHING: Malaysia’s unemployment rate is expected to increase slightly this year, underpinned by a more moderate economic outlook, analysts generally observed.
According to the research team at AmInvestment Bank Bhd (AmInvestment), the labour market remained favourable with the unemployment rate closing the year 2019 at 3.3 per cent.
However, it cautioned that the outlook for the labour market is challenging in 2020.
“The outlook of labour market remains challenging in 2020, underpinned by a more moderate economic outlook. The unemployment rate is expected to inch up to 3.4 to 3.6 per cent,” it said.
Concurring this view, the research team at Kenanga Investment Bank Bhd (Kenanga Research) expected Malaysia’s unemployment rate to edge up in 2020 to 3.4 per cent due to the slowed economic growth outlook.
“Cautious growth outlook retained as manufacturing slowdown may extend in the first half of 2020 (1H20) due to the adverse impact of coronavirus and evidenced by the latest manufacturing PMI pointing to weak export demand.
“This will exert pressure on the local job market in the near term amid positive developments surrounding the US-China phase-one trade deal,” it explained.
Meanwhile, on the performance of the labour market in 2019, Kenanga Research noted that the unemployment rate inched up in the final month last year, but overall 2019 growth in line with its forecast of 3.3 per cent.
It further highlighted that labour force and employment shrank for the first time since Nov 2017 at the same pace of 0.2 per cent month-on-month (m-o-m) decline (0.3 per cent in November).
AmInvestment noted said the labour market remained healthy with the unemployment rate in December coming in at 3.3 per cent slightly higher than the 3.2 per cent in Nov.
“The slight uptick was due to a decline in job creation activities, down 29,000 from 49,400 in Nov, and a pick-up in unemployed persons at 3,100 from 1,800 in November.
But labour force participation rate rose 68.9 per cent in December – the highest since October 2013 from November’s 68.8 per cent.
“Meanwhile, the outside labour force (housewives, students, retirees and those inactively looking for job), eased to 0.1 per cent y-o-y in December from 0.3 per cent y-o-y in November,” it said.
For the full year of 2019, the headline labour market condition remained healthy with unemployment rate at 3.3 per cent, the same as in 2018.
The research team said, job creation remained steady albeit at slower pace of 300,000 jobs in 2019 from 346,000.
“Nevertheless, youth unemployment in 2019 rose to 11.7 per cent in 2019 from 11.2 per cent in 2018,” it pointed out.