Malaysia’s unemployment rate edged up to 3.0% in April 2026 from 2.9% in March, ending five consecutive months of stability, although labour market conditions remain broadly resilient amid continued hiring and strong labour force participation, according to Kenanga Research.
The research house noted that the number of unemployed persons increased by 0.6% month-on-month to 511,800, the highest level in nine months, compared with 509,000 in March.
Among the unemployed, the number of actively unemployed individuals — those available and actively seeking work — rose slightly to 407,100 from 405,800 previously. However, their share of total unemployment declined to 79.5% from 79.7%.
Despite the rise in unemployment, employment growth remained positive, with the number of employed persons increasing by 0.1% month-on-month, matching the pace recorded in March.
Kenanga said the services sector continued to be the main driver of job creation, led by hiring in wholesale and retail trade, accommodation and food and beverage services, as well as information and communications activities.
Employment also expanded across manufacturing, construction, agriculture, and mining and quarrying sectors.
By employment category, the number of employees rose 0.1% in April after remaining flat in March. Own-account workers continued to increase, although growth slowed to 0.2%, the weakest pace in three months.
The number of employers remained unchanged during the month, while unpaid family workers declined for a second consecutive month.
Malaysia’s labour force participation rate (LFPR) remained at a record high of 70.9% for the fourth straight month, reflecting sustained engagement in the workforce.
The labour force expanded by 0.1% to 17.33 million persons from 17.31 million in March.
Meanwhile, the number of people outside the labour force declined marginally for a fifth consecutive month to 7.10 million.
Kenanga highlighted that labour market conditions improved across several regional economies in April.
In Japan, the unemployment rate fell to 2.5% from 2.7%, marking a nine-month low as employment increased by 640,000 people.
Meanwhile, Taiwan recorded a decline in unemployment to 3.3% from 3.4%, supported by seasonal hiring following the Lunar New Year period.
While maintaining a positive view on Malaysia’s labour market, Kenanga noted some emerging signs of moderation.
Data from Social Security Organisation showed that reported loss of employment (LOE) cases increased to 7,766 in May from 7,162 in April, exceeding the 2025 monthly average of 6,237 cases.
Preliminary data for early June indicated 1,531 job losses had already been recorded as of June 5, suggesting further increases may be forthcoming.
At the same time, active job vacancies declined to 107,439 at the end of May from 112,429 a month earlier.
Kenanga said downside risks to employment could intensify in the second half of the year should external economic headwinds begin to affect export-oriented industries.
Despite April’s uptick in unemployment, Kenanga maintained its 2026 unemployment rate forecast at 2.9%, unchanged from its previous estimate.
The research house said labour market conditions continue to be supported by resilient domestic demand, government policy measures and tourism-related hiring linked to the ongoing Visit Malaysia 2026 initiative.
Government wage adjustments and targeted cash assistance programmes are also helping sustain household spending and economic activity.
Kenanga reiterated its 2026 gross domestic product growth forecast of 4.5%, compared with 5.2% in 2025, while expecting second-quarter growth to remain above 5.0%, supported by inventory accumulation and favourable base effects.
However, the brokerage cautioned that demand conditions could soften in the second half of the year if elevated energy prices persist and external uncertainties weigh on business activity and exports.
