KUALA LUMPUR (Dec 14): Analysts remained cautious about the job market’s recovery after the unemployment rate remained high at 4.7% in October.
Hong Leong Investment Bank (HLIB) Research analysts Felicia Ling and Goh Khing Mae said in a note today the reimplementation of the conditional movement control order (CMCO) during the month had impacted the labour market.
“The unemployment rate inched higher to 4.7% (September: 4.6%) as the number of unemployed persons increased (+10,700; September: -4,100) after four consecutive months of a declining trend,” they said.
They anticipated labour market conditions to improve as CMCO 2.0 restrictions ease up.
However, due to persistent social distancing measures amid a high number of Covid-19 cases, they opined that risk aversion may persist.
The loss of employment is concentrated in Selangor and Kuala Lumpur, which hold some of the highest numbers of positive cases in the country, they noted.
“We expect 2020 GDP (gross domestic product) to contract by 5.5% and revise downwards [our] 2021 GDP forecast to +6% (previously +6.5%),” they said.
Meanwhile, Affin Hwang Capital analysts Alan Tan Chew Leong, Naomi Margaret Kasimir and Mas AidaChe Mansor expect Malaysia’s unemployment rate to average around 4.5% to 4.7% in 2020 (3.3% in 2019).
They maintained their forecast as they believe there are still some downside risks to economic activity, which may impact the labour market, especially if the number of Covid-19 cases continues to remain elevated and containment measures are tightened further.
“As international borders are likely to remain closed in the near to medium term in order to contain the infection, employment in the tourism sector will still be negatively impacted. Employment in the tourism sector accounts for 23.6% of total employment,” they said.
BIMB Securities Research analyst Imran Nurginias Ibrahim also believes the labour market recovery could take longer than expected amid a resurgence of Covid-19.
“Looking at the current situation, with an increasing number of new Covid-19 cases since October, the labour market will continue to face uncertainties,
“Pressure on the labour market from both the increased number of people who are temporarily not working as well as higher unemployment will continue and, therefore, we are extra cautious about progress in the labour market recovery,” he said.
He expects the labour market recovery to remain weak in the coming months.
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