KUALA LUMPUR: Kenanga Investment Bank Bhd (Kenanga IB) expects the labour market to remain robust and tight for the rest of the year, with the average unemployment rate projected at 3.5 per cent.
In a note today, the research firm said the unemployment rate has remained steady over the last few months, with sustained addition of jobs and a record labour participation rate, thanks to more resilient domestic demand and the continued recovery in the services sector amidst increased tourist arrivals.
“Moving forward, we believe the labour market will remain supported by an increase in investment spending and various government policy support to raise basic wages for the lower income group under the MADANI Economy, as well as the expectation of higher allocation under Budget 2024,” it said.
Against this backdrop, Kenanga IB has kept its second quarter of 2023 (2Q 2023) gross domestic product (GDP) growth forecast at 6.0 per cent, backed by domestic demand and expansion in the services sector.
“Nevertheless, we project growth to moderate by 3.6 per cent in the second half of 2023, with 2023 GDP growth forecast at 4.7 per cent,” it said.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) expects the labour market situation to continue improving on the back of the sustained growth momentum in the domestic economy, albeit at a more moderate pace.
The uptick in tourist arrivals is also expected to boost the recovery in tourism industries, consequently increasing employment opportunities, particularly in the services sector.
“Nevertheless, the hiring pace might slow down in the coming months in tandem with the slowing global economy,” it said.
According to the Department of Statistics Malaysia (DoSM), the country’s unemployment rate declined by 0.1 percentage point to 3.4 per cent in June 2023 from 3.5 per cent recorded in May, as the number of unemployed persons fell to 581,700 from 584,600 persons previously. – BERNAMA
