KUALA LUMPUR: Malaysia's labour market is expected to benefit from improved domestic and international markets in the near term, as evidenced by improvement in the latest manufacturing purchasing managers index (PMI), which stood at 47.9 for November compared to 46.8 in October, and softer contraction in exports, which was at -4.4 per cent in October from -13.8 in September.
Kenanga Investment Bank Bhd said this positive outlook will be further supported by robust domestic demand, driven by resilient household spending towards the year-end and festive season, alongside the influx of tourist arrivals.
The research firm said that the ongoing freeze on foreign worker intake is set to boost local hiring and salaries.
"This will be reinforced by the government's upcoming Progressive Wage Model (PWM) aimed at raising pay for the low and semi-skilled workforce," Kenanga said in a note today.
Malaysia's labour market remained stable in October, consistently holding an unemployment rate of 3.4 per cent, as seen in September.
Unemployed persons were down -0.5 per cent month-on-month (MoM) from -0.6 per cent in September, extending its decline for 27 consecutive months.
This stability indicates a resilient employment landscape, balancing job availability and workforce participation in the country, Kenanga said.
Consequently, the number of unemployed persons fell to 570.9k from 573.7k recorded in September, the lowest since February 2020 of 525.2k).
Additionally, the actively unemployed fell to 457.2k from 458.9k in September, the lowest since March 2020 of 422.9k.
Employment growth is mainly driven by the services sector, especially in wholesale and retail, food and beverages, and transportation and storage sub-sectors.
Government projections suggest that the PWM could reduce the unemployment rate by up to 0.35 per cent, the firm noted.
"That said, we expect the labour market to continue its robust performance in the near term and throughout 2024.
"Our unchanged forecast, barring unexpected events, predicts the average unemployment rate will settle at 3.5 per cent in 2023 compared to 3.8 per cent in 2022 and be further reduced to 3.3 per cent in 2024.
"This outlook is underpinned by expected economic improvements, with a projected 2024 gross domestic product (GDP) growth of 4.9 per cent, up from a forecast of 3.5 per cent-4.0 per cent in 2023 from 8.7 per cent posted in 2022," Kenanga said.