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Unemployment continues to decline in Malaysia in July 2023

Unemployment continues to decline in Malaysia in July 2023

Year-on-year, the number of unemployed persons saw a 6.7% decline, equivalent to 41,500 fewer people who were unemployed this year.

The number of unemployed persons in Malaysia continued to decline in July this year, dropping by 0.4% and recording 579,200 persons, according to the Department of Statistics Malaysia (DOSM). The unemployment rate in the month remained at 3.4%.

As further observed in the Department's Monthly principal statistics of labour force report for July, published on Friday (8 September 2023), seasonally adjusted estimates saw the number of unemployed increase by 1%, with an unemployment rate of 3.3%.

As compared to the same month of the previous year, the number of unemployed persons posted a 6.7% decline – or equivalent to a reduction of 41,500 persons (July 2022: 620,70 persons). Subsequently, the unemployment rate also edged down by 0.3 percentage points (pp) as compared to July last year (3.7%).

Breaking down the data, the report noted:

  • Looking at the unemployment category, 80.2% of the total unemployed persons were those who were available for work and were actively seeking jobs, or the actively unemployed – a 0.5% drop (-2,200 persons) from June 2023, to record 464,700 persons.
  • By duration of unemployment among the total actively unemployed, those who were unemployed for less than three months comprised 61.3%, while those who were in long-term unemployment for more than a year encompassed 6.3%.
  • Similarly, the inactively unemployed, or those who believed that there were no jobs available, registered a decrease of 0.3% (-300 persons) to record 114,500 persons in July (June 2023: 114,800).
  • The unemployment rate in July 2023, for youth aged 15 to 24, dropped by 0.1 percentage points (pp) to record 10.9%, with the number of unemployed youths standing at 311,200 persons (June 2023: 11%; 312,400 persons). Likewise, the unemployment rate for youth aged 15 to 30 decreased by 0.1pp to record 6.8%, registering 444,800 unemployed youths (June 2023: 6.9%; 446,800 persons)


Next, coming to data on employment, DOSM noted a "continuous upward trend" in the number of employed persons in July (+0.2%, or 27,200 persons), recording a total of 16.34mn persons (June: 16.31mn persons). When seasonally adjusted, however, July saw a 0.1% decrease in the number of employed persons.

Year-on-year, more people were employed in July 2023 as compared to July 2022 − in numbers, this added up to 356,600 more people employed this July, a 2.2% increase to a year ago (July 2022: 15.98 mn persons).

Digging deeper into the data, DOSM looked at the number of persons employed across the country's economic sectors. Overall, the services sector continued to see increases in the number of employed persons, particularly in food & beverage services, wholesale & retail trade, and education activities.

At the same time, the number of employed persons in the construction and the mining & quarrying sectors also remained on a positive trend, according to DOSM. On the other hand, the manufacturing and agriculture sectors recorded marginal declines during the month. 

Apart from the above, the data was also analysed the individual categories of employment – citing the employees' category as having the largest composition of the total employed persons (75.4%). Per the data, this category registered a month-on-month increase of 0.1% (+14,400 persons) in July this year, recording a total of 12.31mn persons employed (June 2023: 12.30mn persons).

Similarly, the number of own-account workers was also on increasing trend, with an addition of 10,400 persons (+0.4%) to register 2.96mn persons (June 2023: 2.95mn persons). This category consists mostly of daily income earners working in small businesses, such as small retailers, hawkers and sellers in markets and stalls, as well as smallholders.

Last, the data also noted a month-on-month increase in the number of employed persons who were temporarily not working: While there were 80,400 persons in this category in June, the figures increased to 80,900 in July, recording a 0.7% rise. Year-on-year, it was added, this category saw a 3.3% decline (-2,800 persons) from 83,700 persons registered in the same month of the previous year. This specific group of persons, who were most likely not able to work temporarily, were not classified as unemployed as they had work to return to.

Outlook on Malaysia's labour force position in the coming months

As pointed out in the report, the Malaysian economy was seen to grow modestly in Q2 2023 based on the GDP recorded (2.9%) in the quarter, after posting an "impressive growth" of 5.6% in the previous quarter.

This growth, it added, is supported by an improving labour market, continued domestic demand, and encouraging economic activity.

However, the global economy is expected to "flourish at a slower pace in 2023 as there are still hindrances from continued high inflation and higher interest rates." Particularly, while the reopening of China's economy remains supportive of the global economy, the slower-than-expected pace of recovery in recent months is seen as affecting global growth.

As a result, DOSM shared, the Malaysian economy is anticipated to continue to grow at a moderate pace in Q3 2023 due to slower external demand, which is seen as continuing to affect economic activities, especially in export-oriented sectors.

Malaysia's economic growth will also be supported by domestic demand and a favourable labour market position, particularly in domestically oriented sectors.

DOSM further noted that the number of tourist arrivals is also expected to continue increasing, which will encourage tourist activities.

In line with this, based on business performance forecasts for Q3 2023, traders foresee an improved business position for the quarter with a positive confidence indicator of 0.7%, compared to -3.1 per cent in the second quarter of 2023.

"These positive business expectations are supported by the stability of the job market, the increase in domestic tourism and more optimistic prospects in the health tourism industry.

"Therefore, the country ‘s labour force position in the coming months is expected to remain positive and expand modestly in line with the Malaysian LI in June 2023, which anticipates Malaysia's short-term economic outlook to moderate in the future months."

ALSO READ: Strong labour market conditions to support domestic demand: Bank Negara Malaysia

Photo: DOSM

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