PETALING JAYA: April’s unemployment rate dipped to 3.9%, below 4.0% for the first time since the Covid-19 outbreak, as economic activities continued to flourish as Malaysia reopened the international borders at the beginning of April.
UOB Research said although the labour market continued to show signs of strength, the recovery is facing significant headwinds due to factors such as global recession fears, elevated business costs, prolonged supply chain bottlenecks, and China’s economic slowdown.
“Hence, a full labour market recovery back to pre-pandemic levels is still unlikely for now. We maintain our outlook for the unemployment rate to ease further but remain above the pre-pandemic levels at 3.6% by end-2022,“ it said in a report today.
It added that the nine straight months of improvement across most labour market indicators suggest a sustained labour market recovery through 2022. Key positive drivers of the recovery include Malaysia’s transition to endemicity with full reopening of economic activities and country borders between April and May, higher national vaccination rates against Covid pandemic, the government’s ongoing policy support for targeted and vulnerable groups, as well as resilient global demand.
MIDF Research said Malaysia’s unemployment rate is expected to trend lower this year underpinned by a further recovery in the domestic economy, continuous upbeat momentum in global trade, and coupled with elevated commodity prices. With the announcement of international borders reopening, Malaysia’s labour market recovery remains on steady path following the possible return of non-citizens workers.
“However, we view the return of foreign workers would be in modest pace amid labour rules and Covid-19 measures that need to be satisfied. Hence, we keep our average unemployment rate forecast at 4.0% for this year, higher than pre-pandemic level 3.4%.”
It views Malaysia’s labour market to stay in steady recovery trend as indicated by job-vacancy rate registered at 70.5% in March, slightly lower than record high 74.9% in February.
“With international borders reopened, more businesses can reach higher operating capacity in the domestic economy such as aviation, tourism, construction and manufacturing sectors. As an oil-exporting economy, we expect labour demand for primary sectors particularly oil & gas and oil palm plantation to rise significantly amid elevated global commodity prices effects,“ said MIDF.
