Economic Update
Local
Malaysia Labour Market - Supportive of growth outlook despite external risks
Mon, 13-Oct-2025 07:49 am
by Research Team • Apex Research

  • The labour market remained stable in August, with the unemployment rate holding at 3.0%, consistent with full employment.

  • Hiring in the services sector is expected to remain firm, supported by resilient domestic demand, though risks persist for export-oriented manufacturing sectors amid impending sectoral tariffs and geopolitical tensions.     

  • We maintain our 2025 unemployment forecast at 3.0% (2024: 3.2%), which should help anchor household spending against external trade headwinds.

  • We keep our 2025 private consumption growth forecast at +5.1% YoY (2024: +5.1%) and reiterate our 2025 GDP growth projection at +4.2% (2024: +5.1%).   

 

Resilient labour market conditions in August   

Malaysia’s labour market remained largely stable in August. The unemployment rate stayed at 3.0% (Jul: 3.0%), as the number of unemployed edged down to 520k (Jul: 521.6k). Meanwhile, active jobseekers went down slightly to 414.9k (Jul: 416.2k).

Employment growth held steady at +0.2% MoM (Jul: +0.2%), led by hiring in services sector, particularly wholesale & retail trade, information & communication as well as accommodation and F&B. Besides, manufacturing, construction, mining and agriculture sectors also recorded upward trend. By employment status, the number of employers (+0.7%; Jul: +0.6%) and employees (+0.2%; Jul: +0.1%) continued to rise, while the self-employed (-0.2%; Jul: -0.02%) eased during the month.

The labour force expanded by +0.2% MoM (Jul: +0.2%) to 17.51m (Jul: 17.47m), with the participation rate edging higher to 70.9% (Jul: 70.8%).

 

Potential softening in manufacturing hires     

The stable labour market continues to underscore resilience despite the US’s 19% tariff on Malaysia that took effect in August. We expect hiring momentum in the services sector to hold up, supported by firm domestic demand and generally positive business conditions. However, risks are tilted towards softer hirings in export-oriented manufacturing sectors amid external headwinds including impending sectoral tariffs and geopolitical conflicts. Malaysia’s September manufacturing PMI signalled reductions in staffing alongside subdued export orders, suggesting potential slowdown in hiring momentum within the sector.     

 

Stable labour market to underpin consumption amid external risks   

With the unemployment rate averaging 3.0% in 8M25, we maintain our 2025 unemployment forecast at 3.0% (2024: 3.2%), consistent with full employment. A resilient labour market at this level should continue to anchor household spending and cushion the economy against external trade headwinds. We therefore keep our 2025 private consumption growth forecast at +5.1% YoY (2024: +5.1%), and reiterate our 2025 GDP growth projection at +4.2% (2024: +5.1%).

Sentiment: Neutral
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