BNM Report: Labour conditions improved with unemployment declining to 3.9%

The BNM Quarterly Bulletin for the Second Quarter (2Q) of 2022 cited labour market conditions continued to improve in the second quarter of 2022.

The unemployment rate declined further to 3.9% in the second quarter (2Q) from 4.1% in 1Q for the year.

This was driven by a robust increase in employment (+126 thousand persons, 1Q 2022: +134 thousand persons), alongside a continued strong expansion of the labour force (+97 thousand persons, 1Q 2022: +111 thousand persons).

As a result, the labour force participation rate increased to 69.2% of the working-age population, above the pre-pandemic level of 69% in Quarter 1 (1Q) and 69.1% in Quarter 4, 2019.

Meanwhile, the population outside the labour force declined further to 7.26 million people, compared to 7.29 million people in the previous quarter of 2022, indicating continued entries of workers into the labour force amid stronger economic activity.

The underemployment rate further declined to 1.3% of the labour force (1Q 2022: 1.5%). Data from the Employment Insurance System (EIS) showed jobless claims also declined during the quarter (7,643 persons; 1Q 2022: 10,433 persons), while the placement rate of employees into new jobs remained strong (46 per 100 people retrenched; 1Q 2022: 41).

This suggests a relatively strong pace of hiring amid lower retrenchments in the economy.

Private sector wages improved further in the second quarter of 2022, growing by 7.8% on a year-on-year basis (1Q 2022: 4.7%), and supported in part by the increase in the minimum wage.

Wages in the manufacturing sector increased by 5.2% (1Q 2022: 4.1%), driven by broad-based improvements across manufacturing industries, particularly the E&E, non-metallic mineral products, basic metal and fabricated metal products and F&B and tobacco subsectors.

Meanwhile, wages in the services sector registered strong growth to 9.3%; rising from 5% in Quarter 1, supported by the wholesale and retail, transportation and storage, and information and communication subsectors.

On a quarter-on-quarter seasonally adjusted basis, the momentum in private sector wage growth was constant at 2.4% (1Q 2.6%).

Export performance remained strong

Meanwhile, Gross exports increased by 30.0% (1Q 2022: 22.0%), reflecting a broad-based expansion across products, supported by external demand and higher commodity prices.

Meanwhile, gross imports grew by 36.1% (1Q 2022: 25.2%), driven by the growth in intermediate imports.

Trade surplus narrowed to RM58.1 billion (1Q 2022: RM65.0 billion), while manufactured exports expanded by 26.0% (1Q 2022: 17.8%), underpinned by stronger E&E exports (37.6%, 1Q 2022: 27.2%).

Non-E&E exports registered a growth of 18.2% (1Q 2022: 10.4%), largely attributable to the exports of petroleum products, palm-oil based manufactured products as well as metal manufactures.

The growth of commodity exports remained robust at 55.3% (1Q 2022: 51.9%), supported mainly by CPO, LNG and crude oil exports amid higher commodity prices.

Intermediate imports recorded a strong growth of 36.2% (1Q 2022: 29.0%) in tandem with the expansion in manufactured exports.

Consumption imports grew by 18.1% (1Q 2022: 24.4%), supported by the strong growth in private consumption. Growth in capital imports, however, moderated to 8.2% (1Q 2022: 17.5%).

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