KUALA LUMPUR: Malaysia's labour market may strengthen further in 2023 on the back of continuous positive momentum in domestic economy as well as modest expansion in external sectors.
MIDF Research expects the unemployment rate in the country to drop to 3.5 per cent, slightly higher than the pre-pandemic level of 3.3 per cent.
"Steady expansion in primary sectors as well as construction and services will prop up more employment opportunities next year," it said.
MIDF Research said as of April this year, the unemployment rate was maintained at a pandemic low of 3.5 per cent, siignalling the continuous recovery of the domestic labour market.
Labour force and employment continued to increase by 2.0 per cent and 2.5 per cent respectively year-on-year (y-o-y).
On a monthly basis, employment growth stood at 0.2 per cent month-on-month.
MIDF Research said the strengthening job market will reinforce consumer consumption and contribute to overal gross domestic product (GDP) for 2023.
The firm, however, expects a slight moderation of employment growth in the second half of this year, due to the weakening of external trade performance.
As for the first four months of 2023, employment grew by 2.8 per cent y-o-y and average jobless rate 3.5 per cent.
"Unemployment dipped further by 9.6 per cent y-o-y, marking the 20th consecutive months of contraction rate. In addition, outside labour force reduced by 0.6 per cent y-o-y, registering the 18th straight months of negative growth rate," it said.
MIDF Research said the unemployment rate for youth aged 15-24 has dropped to a new post- pandemic low of 11.1 per cent but remained higher than pre-pandemic which stood at 10.4 per cent in 2019.
The firm also said that monthly job vacancies remained above 200,000, continuing from the post-pandemic positive momentum.
"We believe the continuous elevated job vacancies among others supported the steady employment growth and reduction in unemployment as well as outside labour force since early 2021," it said.
The firm noted that there was a steady increase in services sector at 63.6 per cent of total vacancies.
Construction vacancies ratio improved to 11.8 per cent, and commodity-based sectors like agriculture and mining also witnessed higher rates at 7.8 per cent and 2.2 per cent respecrtively in March.
MIDF Research said in line with external trade slowdown, vacancies in manufacturing sector to total vacancies share deteriorated to a new record low at 14.6 per cent.
"We foresee average job vacancies to hover between 150,000 and 250,000 per month for 2023 compared to 396,300 in 2022 due to external trade weakness to stay on in the second half of 2023," it added.
Source: https://www.nst.com.my/business/2023/06/918849/malaysias-labour-market-strengthen-further-says-midf-research