Affin Hwang expects unemployment rate to remain stable at around 3.3pc this year

KUALA LUMPUR: Malaysia's labour market condition is expected to remain resilient in 2024 supported by the country's domestic demand, said Affin Hwang Capital.

Affin Hwang said the labour market improved further with the unemployment rate returning to the pre-pandemic level of 3.3 per cent in November versus 3.4 per cent in October.

Total employment sustained its upward trajectory, increasing by 27.9k to 16.43 million persons during the month compared to 16.40 million in October.

"Overall, we expect the country's unemployment rate to remain stable around 3.3 per cent throughout 2024 (estimated at 3.3 per cent as of the end of 2023)," it said in a note.

Affin Hwang believes Malaysia's economic growth will be supported by domestic demand from both private consumption and investment activity, providing some support from the uncertainties in "higher and longer" global monetary policy rate, as well as the potential escalation of geopolitical tension.

The country's Leading Economic Index (LEI) declined to 109.2 points in October from 109.4 points in September, remaining on a contractionary trajectory for the eighth consecutive month on a year-on-year basis.

Nevertheless, the firm believes global growth momentum is expected to pick up in the second half of the year due to the anticipated recovery in global trade activities amid the loosening of global monetary policy.

"Thus, Malaysia's labour market is anticipated to remain stable, with employment growth in the manufacturing sector, particularly export-oriented industries, projected to improve in tandem with the recovery of global trade," it said.

Despite the uncertainties of the global economy, the Department of Statistics highlighted that Malaysia's diversified economic structure played a significant role in ensuring stable economic growth, especially from growth in domestic demand.

Meanwhile, Affin Hwang said the sustained recovery of the tourism sector in the country has also provided further support to the economy.

"As a result, these positive catalysts have led to a stable improvement in the labour market in November. In tandem with the relatively healthy labour market condition, Socso's loss of employment or retrenchment data declined to 4.6k in December from 5.0k in November.

"It was contributed by lower LOE cases in the admin & supportive service and manufacturing sectors, but partially offset by higher cases in the wholesale and retail sector," it added.

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