While the unemployment rate remained unchanged at 3.0% in June 2026, pointing to continued stability, the labour market did show signs of softer hiring based on DOSM’s latest data released yesterday.
The number of unemployed persons increased 0.9% month-on-month (m-o-m) to 517,800 in June, compared with a 0.3% increase in May. The number stood at 513,400 in the previous month.
Among those unemployed, the number of actively unemployed — individuals who are available for work and actively seeking employment — rose 0.7% m-o-m to 410,900 from 408,000 previously.
However, their share of total unemployment edged down slightly to 79.4% in June from 79.5% in May.
Kenanga said employment growth stalled in June, with the number of employed persons remaining broadly unchanged from the previous month, compared with 0.1% growth in May, suggesting some moderation in hiring activity.
The services sector continued to be the main contributor to employment, supported particularly by transportation and storage, accommodation and food and beverage services, as well as wholesale and retail trade.
Employment in the manufacturing and construction sectors also expanded, while the agriculture and mining and quarrying sectors recorded declines.
By employment status, the number of employees remained unchanged month-on-month, while own-account workers also stayed flat. The number of employers edged down 0.1%, while unpaid family workers declined 0.4%, marking the fourth consecutive monthly contraction.
Meanwhile, Malaysia’s labour force participation rate (LFPR) remained at a record high of 70.9% for the sixth consecutive month.
The labour force was essentially unchanged at 17.34 million persons in June, compared with May, while the number of people outside the labour force increased 0.09% to 7.11 million, its highest level in six months.
Kenanga said Malaysia’s labour market remained broadly stable despite persistent geopolitical uncertainty.
“Hiring should remain supported by resilient domestic demand, stronger tourism flows from the Visit Malaysia 2026 campaign, Formula One-related activities at Sepang, and the ongoing global E&E upcycle,” it said.
However, more recent data from the Social Security Organisation (PERKESO) pointed to an increase in job losses.
Data from PERKESO’s MYFutureJobs showed that Loss of Employment (LOE) cases rose to 9,013 in July from 8,100 in June, with a further 2,746 cases recorded as of August 10.
Kenanga said Mutual Separation Scheme (MSS) and Voluntary Separation Scheme (VSS) exercises, together with ongoing corporate restructuring, were among the factors contributing to the increase in layoffs.
Manufacturing accounted for the largest share of reported layoffs at 19.0%, followed by wholesale and retail trade at 18.0%.
Despite the rise in retrenchments, labour demand remained healthy, with active job vacancies climbing to 242,434 at the end of July from 103,394 in June.
Job placements, however, eased to 15,392 in July from 16,620 in June.
Kenanga said the high level of available vacancies should help cushion the impact of higher retrenchments and support overall labour market resilience.
The research house maintained its 2026 unemployment rate forecast at 2.9%, compared with 3.0% in 2025, citing expectations for continued domestic economic activity.
It also retained its 2026 GDP growth forecast at between 4.5% and 5.0%, versus 5.2% in 2025, while noting the possibility of a near-term upgrade if domestic demand continues to drive economic momentum.
Overall, Kenanga expects Malaysia’s labour market to remain relatively resilient in the second half of 2026, with strong domestic activity and healthy job vacancies helping to offset rising corporate restructuring and retrenchment risks.
