PETALING JAYA: Malaysia’s labour market will continue to see improvement in the coming months, thanks to the reopening of the economy, according to several research houses.

       They note the progress of the Covid-19 vaccination campaign would support a revival of business activities, and hence, result in more hiring.

       As it is, the country’s unemployment rate had eased for the second consecutive month, falling to 4.5% in September – the lowest since May 2021. This compared with 4.6% in August.

       AmBank Research said the improvement in the labour market was supported by the reopening of the economy from the restrictive measures imposed in June to contain the virus spread.

       “And more importantly, the number of own account workers rose faster than the employee’s category.

       “This could mean job creation at the real economic activities is still slow. Many are working on their own in the form of micro business,” the research house said in its report yesterday.

       AmBank Research forecast the unemployment rate this year would settle at 4.4%, compared with its earlier forecast of 4.8%.

       Kenanga Research, on the other hand, said it expected the unemployment rate to be 4.6% in 2021, before improving to 3.9% next year.

       The country’s unemployment rate stood at 4.5% in 2020.

       “As the economy reopens thanks to the progress of the Covid-19 vaccination campaign, we expect the labour market to gradually recover going into 2022, supported by the various ongoing policy support and sizeable fiscal expenditure,” Kenanga Research said in its report.

       “Nevertheless, we retain our cautiously optimistic outlook on the labour market, given the persistent downside risks associated with the unabated surge of Covid-19 infections and the possible emergence of new virulent variants, as well as ongoing disruption in the global supply chain,” it added.

       MIDF Research noted with the further easing of the restrictions and improvements in domestic economic activities, businesses were expected to hire more employees in the coming months.

       This would mean the recovery in the labour market would strengthen.

       “The downward trend in the daily Covid-19 cases along with the further progress in vaccination rate will boost sentiment among consumers and businesses to raise their spending activities and hiring plans,” it said.

       MIDF Research forecast an average jobless rate of 4.5% in 2021.

       Meanwhile, in another sign of recovery, Malaysia’s industrial production index or IPI grew 2.5% year-on-year (y-o-y) in September after two months of decline (August: -0.7% y-o-y and July: -5% y-o-y).

       AmBank noted with improved management of the Covid-19 pandemic, healthy external growth, and surging commodity prices, Malaysia’s gross domestic product (GDP) would likely see a rebound in the third quarter (Q3) of this year.

       “We expect the contraction of Q3 2021 GDP would be around 1.5%, compared with our previous estimate of -2.4%,” it said.

       “And with better performance expected in Q4 of 2021, supported by the reopening of the borders, the overall economy could now reach 4% for the full year, driven by an improvement of Q4 2021 GDP at an estimated 1.9%,” it added.