Labour market condition continued to improve in June, with the unemployment rate edged down to 3.4%, its lowest level since February 2020 Unemployed persons continue to decline for 23 consecutive months and the sharpest drop in three months.
The number of unemployed persons fell to 581.7k, the lowest since February 2020. Additionally, the actively unemployed fell to 466.9k, the lowest since April 2020. Employment growth expanded at a steady pace for 23rd straight month, hitting 16.31m people, a record high. Labour force: growth remained steady, with the total labour force expanding to a record high of 16.89m persons. New job creation: expanded slightly compared to the previous month.
Labour force participation rate remained at its record level in June, unchanged since April. The number of those outside the labour force declined further to 7.225m as more people returned to the job market.
2023 unemployment rate forecast maintain at 3.5%, but the 2024 forecast was revised to 3.3%. Kenanga expects the labour market to remain robust and tight for the rest of the year, with the average unemployment rate projected at 3.5% (2022: 3.8%). The unemployment rate has remained steady for the last few months, with sustained jobs added and a record labour participation rate thanks to a more resilient domestic demand and the continued recovery in the services sector amid increased tourist arrivals. Moving forward, the house believes 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 through its Progressive wage policy and the higher expected allocation under Budget 2024.
Against this backdrop, Kenanga says it is keeping the 2Q23 GDP growth forecast at 6.0%, backed by domestic demand and expansion in the services sector to support the growth outlook. Nevertheless, it projects growth to moderate in 2H23 (3.6%; 1H23E: 5.8%), with 2023 GDP growth forecast at 4.7% (2022: 8.7%)
