KUALA LUMPUR: Unemployment rate in Malaysia is expected to hold steady at 3.3 per cent this year, supported by increased investments from foreign and domestic sources that can support the labour market.
As at December 2023, Malaysia's unemployment rate stayed at 3.3 per cent, reflecting higher employments across all sectors.
SG-UOB Global Economics & Markets research said the labour market improved further towards the end of last year due to normalisation of economic activities and steady recovery of tourism related sectors.
"We note that business and consumer sentiment has turned more cautious amid ongoing external challenges, geopolitical risks, as well as several new taxes and subsidy rationalisation measures on the horizon. This could slow hiring trends in the coming months."Nevertheless, we continue to see positive domestic drivers supported by increased investments from foreign and domestic sources that can support the labour market," it said in a note.
It added that higher infrastructure spending via multi-year investment projects as well as improving tourism activities would generate economic momentum and sustain jobs in related sectors. Emerging new growth areas such as advanced technology, green and renewable energy, digital finance, and healthcare are potential avenues to create high skilled jobs.
"Given a higher gross domestic product (GDP) growth projection of 4.6 per cent for 2024 with several government enablers and job initiatives underway, we expect the unemployment rate to hold steady at 3.3 per cent by end-2024," said the firm.
The labor force participation rate edged up to another record high of 70.2 per cent in December, with a consistent increase in number of employed.
The number of unemployed persons continued to trend lower, sustaining the declining trend over the last two years.
Overall employment rose further by 26,600 or 0.2 per cent month-on-month to another fresh high of 16.45 million.
More hirings were recorded in the services sector particularly in information & communication, food & beverage, and transport & storage activities.
The construction and mining & quarrying sectors also saw a similar hiring trend in December.
Conversely, agriculture and manufacturing sector recorded declines in hiring.
Hong Leong Investment Bank (HLIB) research said Malaysia's positive economic momentum that persisted throughout 2023 had increased the need for labour.
"As consequence, the number of employed persons steadily improved to keep up with industry demands, and the unemployment rate returned to pre-pandemic levels in November.
"Going forward, we expect the labour market to remain supported by a further increase in tourism activities, the realisation of foreign direct investment (FDI) projects as well government's other job creation initiatives," it said.