Economic Update
Local
Malaysia Labour Market - External tailwinds provide near-term support to hiring
Thu, 11-Dec-2025 07:47 am
by Research Team • Apex Research

  • The labour market remained stable in October, with the unemployment rate holding at 3.0% for the seventh straight month. 

  • Supported by a firm labour market, benign inflation, income-related measures and sustained investment flows, we maintain a resilient domestic demand growth projection of +6.3% YoY for 2025 (YTD: +6.3%; 2024: +6.5%). 

  • External resilience should also provide near-term support, with November’s manufacturing PMI signalling a pick-up in hiring, consistent with rising wages in the sector. 

  • We maintain our unemployment forecasts at 3.0% for 2025 (10M25: 3.0%; 2024: 3.2%) and 3.1% for 2026. A steady labour market and resilient external sector point to potential upside to our current 2025 GDP forecast of +4.5% YoY (2024: +5.1%). 

 

Labour market remains firm in October       

Malaysia’s labour market remained stable in October, with the unemployment rate holding at 3.0% for the seventh straight month, indicating firm domestic economic activity. The number of unemployed inched up to 518.9k (Sep: 518.6k), while active jobseekers rose marginally to 413.8k (Sep: 413.6k).

 

Employment growth remained steady at +0.2% MoM (Sep: +0.2%), supported by continued hiring in the services sector, particularly accommodation and F&B. Employment also rose across manufacturing, construction and agriculture sectors, although the mining sector saw a pullback for the month. 

 

By employment status, the number of employers rose at a slower pace (+0.9% MoM; Sep: +1.3%), while employees (+0.1%; Sep: +0.1%) and own-account workers (+0.4%; Sep: +0.4%) were largely unchanged. The labour force expanded by +0.2% to 17.58m (Sep: 17.54m), with participation rate steady at 70.9%. 

 

External strength supports hiring momentum  

Firm hiring momentum in services, which accounts for nearly two-thirds of total employment, will continue to anchor a resilient job market. A still-tight labour market, together with benign inflation, income-related measures and sustained investment flows, should in turn underpin domestic demand. We maintain our domestic demand growth projection at +6.3% YoY for 2025 (YTD: +6.3%; 2024: +6.5%). 

 

The external sector has also held up better than expected despite tariff concerns. Malaysia’s November manufacturing PMI pointed to improving hiring conditions, supported by stronger new export orders. This is consistent with the uptick in manufacturing wages and salaries (9M25: +1.9% YoY; 2024: +1.5%). External resilience should continue to provide a near-term support to labour market conditions. 

 

Stable outlook ahead

We maintain our unemployment forecasts at 3.0% for 2025 (10M25: 3.0%; 2024: 3.2%) and 3.1% for 2026. A steady labour market and resilient external sector suggest potential upside to our current 2025 GDP growth forecast of +4.5% YoY, potentially toward the upper end of the official 4.0-4.8% range. For 2026, we maintain our GDP projection at +4.1%, reflecting potential tariff spillovers. 

Sentiment: Positive
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