Malaysia’s employment growth is expected to be driven by the services sector, analysts said, following an uptick in the number of unemployed persons for the first time since September 2024.
The services sector's employment gains, which extended in July, were supported by tourism recovery and policy-backed domestic demand, they said.
The trend could continue into next year through “additional job creation from the Visit Malaysia 2026 campaign, particularly within the services and tourism related industries”, TA Securities said in a note.
Meanwhile, the signs of stress in the manufacturing sector, as seen in the sharpest decline in employment since 2023, are seen as “sector-specific adjustments rather than a broad deterioration in labour market conditions”, it said.
In particular, export-oriented manufacturing could be weighed by the 19% US tariff on Malaysian goods beginning August “while protracted geopolitical tensions in the Middle East could add further downside risks”, BIMB Securities said.
“Even so, Malaysia’s strong domestic fundamentals should provide a buffer,” it said, pointing to continued economic expansion and investment activity.
Malaysia’s unemployment rate remained at its decade-low level of 3% for the fourth month running in July, with manufacturing, mining and quarrying, construction, and agriculture sectors all posting year-on-year employment growth.
However, the number of unemployed persons rose to 521,600 in July, from 518,700 in June, marking its first uptick in nearly a year.
TA Securities sees the average unemployment rate at 3% this year, on a par with the average for the first seven months. BIMB Securities, however, maintained its full-year average forecast at a higher level of 3.2%.
Source: theedgemalaysia