Economic Update
Local
Malaysia Labour Market - Positive conditions supportive of growth outlook
Mon, 12-Jan-2026 08:00 am
by To Zheng Hong • Apex Research

  • The labour market remained resilient in November, with the unemployment rate easing further to an 11-year low of 2.9%.

  • Services should remain a key anchor for employment in 2026, supported by resilient consumption, Visit Malaysia 2026 and sustained investment flows.

  • Easing tariff concerns and steady global semiconductor demand provide further tailwinds for manufacturing, supporting continued hiring in the sector.

  • We maintain our unemployment forecasts at 3.0% for 2025 (11M25: 3.0%; 2024: 3.2%) and 3.1% for 2026.

  • Accordingly, we keep our GDP growth projections at +4.7% YoY for 2025 and a more moderate +4.3% for 2026 amid lingering external uncertainties.

 

Unemployment rate falls to 11-year low       

Malaysia’s labour market remained resilient in November, with the unemployment rate easing further to an 11-year low of 2.9%, reflecting a firmer growth outlook alongside an improving external backdrop. The number of unemployed edged down to 518.4k (Oct: 518.9k), while active jobseekers declined marginally to 413.5k (Oct: 413.8k).

 

Employment continued to expand at a steady pace of +0.2% MoM (Oct: +0.2%), underpinned by sustained hiring in the services sector, particularly human health & social work activities, wholesale & retail trade and F&B. Employment gains were also recorded across manufacturing, construction, agriculture and mining sectors during the month.

 

By employment status, the number of employers (+0.8% MoM; Oct: +0.9%) and own-account workers (+0.3%; Oct: +0.4%) moderated slightly, while employees (+0.1%; Oct: +0.1%) was largely unchanged. The labour force expanded by +0.2% to 17.61m (Oct: 17.58m), with the participation rate steady at 70.9%.

 

External resilience provides further tailwinds 

Steady hiring momentum in services, which accounts for nearly two-thirds of total employment, should remain a key anchor in 2026, supported by resilient consumption, Visit Malaysia 2026 and sustained investment flows. A tight labour market, alongside income-related measures including the one-off RM100 SARA subsidy to be disbursed in February, should continue to underpin domestic demand.

 

Externally, easing tariff concerns and a steady outlook for global semiconductor demand amid the AI-led technology upcycle provide further tailwinds for manufacturing, the second-largest contributor to employment. In addition, Malaysia’s December manufacturing PMI recorded a second straight month of employment growth, as firms ramped up hiring ahead of new projects and staff replacement. External resilience should continue to provide near-term support to hiring in manufacturing.

 

Maintain a positive growth outlook 

Overall, firm labour market conditions remain supportive of consumption momentum, consistent with our real private consumption growth forecast of +5.1% YoY in 2026 (9M25: +5.1%). We maintain our unemployment forecasts at 3.0% for 2025 (11M25: 3.0%; 2024: 3.2%) and 3.1% for 2026. Accordingly, we keep our GDP growth projections at +4.7% for 2025 and a more moderate +4.3% for 2026 amid lingering external uncertainties.

 

Sentiment: Positive
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