Malaysia: Unemployment ticked higher to 5.3% in May – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the latest labour market report in Malaysia.

Key Quotes

“As expected, Malaysia’s unemployment rate rose further to 5.3% in May (Apr: 5.0%) as the Movement Control Order (MCO) extended into its third month. The labor force participation rate edged down to 68% due to higher number of persons leaving the labor force for family, housework, and schooling related reasons.”

“Despite the uptick in unemployment rate, we are seeing some encouraging signs that labor market pressures may be easing. This includes 1) fewer additional unemployed persons in May, 2) lesser new recipients under the employee wage retention and wage subsidy programs, and 3) increased job vacancies. This could be partly due to the stimulus packages implemented in addition to more businesses allowed to operate during the Conditional MCO since 4 May.”

“Going forward, we expect the unemployment rate to rise at a slower pace during the recovery phase and eventually stabilise between 4% -5% as businesses adjust in a new post pandemic environment. To watch are 2.27 million persons who are temporarily not working in May but not categorised as unemployed for reasons that include they have work to return to. If this group of people were reclassified as unemployed in the absence of work after the MCO, the unemployment rate would be much higher.”