Malaysia’s unemployment rate drops to 3.4% in June, the lowest in three years

[KUALA LUMPUR] Malaysia’s jobless rate fell to 3.4 per cent in June, the lowest since March 2020, supported by a resilient domestic economy, said the Department of Statistics Malaysia (DOSM) on Thursday (Aug 10).

The number of employed persons in June rose with a month-on-month increase of 0.2 per cent to 16.3 million, while the number of unemployed persons fell to 581,700. Labour force participation in the country climbed to 70 per cent.

As for the number of employed people, this figure continued trending upwards, with a month-on-month rise of 0.2 per cent to nearly 16.9 million in June.

In June, the employment-to-population ratio, which indicates the ability of an economy to create employment, held steady at 67.6 per cent.

All economic sectors saw an increase in hirings in June, with the services sector taking the lead with more people employed in food and beverage service; wholesale and retail trade; transportation and storage activities.

The number of people outside the labour force remained at 7.2 million persons, with the top reasons being family responsibilities, schooling and training.

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In the second quarter, the unemployment rate stood at 3.5 per cent, 0.4 percentage point lower than the figure a year earlier.

In view of the positive trend, DOSM chief statistician Mohd Uzir Mahidin expects the country’s employment to continue growing in the coming months, supported by resilient economic growth anchored by strong domestic demand.

He said the weakening ringgit made foreign direct investment (FDI) into Malaysia more attractive and drew more tourists to the country, which in turn supported job creation.

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“Global businesses such as Intel, Huawei, Tesla and Airbus are making investments in Malaysia’s productive labour force and technological innovation,” he said.

Malaysia’s FDI approvals have been strong since 2021, with a record of RM209 billion (S$61.5 billion), and remained stable at RM163 billion in 2022. In the period spanning from January to March, the country’s approved FDI increased by 52.5 per cent year on year to RM37 billion, according to DOSM data.

In a note on Thursday, MIDF Research said it expects the job market improvement to reinforce consumer consumption and support the overall gross domestic product growth for this year.

“However, we do expect slight moderation of employment growth in coming months due to declining external trade performances,” it added.

For the whole of 2023, MIDF expects the country’s unemployment rate to average around 3.5 per cent, and continue to decline to 3.3 per cent next year.