Economic Update
Local
Malaysia Labour Market - More pronounced headwinds in 2H26
Wed, 12-Aug-2026 07:09 am
by To Zheng Hong • Apex Research

  • The unemployment rate held at 3.0% in June despite external headwinds.

  • Labour market outlook remains positive, underpinned by continued strength in services and manufacturing employment. 

  • We remain cognisant of moderating hiring momentum as lingering Middle East tensions add to business uncertainty and operating costs.

  • We maintain our unemployment rate forecast of 3.0% in 2026 (2025: 3.0%).

 

Steady unemployment rate at 3%   

Malaysia’s labour market remained stable in June, with the unemployment rate holding at 3.0% despite external headwinds from geopolitical tensions, reflecting firm domestic economic momentum. Nonetheless, the number of unemployed rose for the fourth consecutive month to 517.8k (May: 513.4k), while active jobseekers increased to 410.9k (May: 408.0k), suggesting some moderation in labour market conditions and warranting close monitoring in our view.

 

Employment growth was broadly flat at +0.01% MoM (May: +0.05%), with continued hiring in the services sector, particularly “transportation & storage”, “accommodation” and “food & beverage”. Employment in manufacturing and construction also increased, while agriculture and mining posted declines during the month.

 

By employment status, growth in the number of employers (+0.07% MoM; May: +0.2%), employees (+0.02%; May: +0.04%) and self-employed persons (+0.04%; May: +0.1%) all eased during the month. The labour force edged up +0.04% to 17.34m (May: 17.34m), while the labour force participation rate was unchanged at 70.9%.

 

Firm economic activity to support hiring   

Looking ahead, we remain positive on the labour market outlook, with job creation underpinned by continued strength in the domestic economy. The services sector, which accounts for nearly two-thirds of total employment, should remain the key anchor of hiring momentum, supported by firm household spending and ongoing policy support for consumption.

 

Meanwhile, manufacturing employment, particularly in the E&E segment, should continue to benefit from sustained global semiconductor demand amid the ongoing AI upcycle. The E&E segment accounts for c.27% of domestic manufacturing output. Over the longer term, continued data centre and broader ICT investments should further support demand for higher-skilled workers and underpin private-sector wage growth

 

Caution warranted as hiring momentum softens                

While the near-term labour market outlook remains broadly intact, we are cognisant of the recent moderation in hiring momentum, particularly as lingering Middle East tensions add to business uncertainty and operating costs. The latest Malaysia manufacturing PMI for July indicated that firms trimmed their staffing levels. Notably, besides resignations and layoffs, manufacturers cited efforts to reduce headcounts to lower operating costs.

 

Separate data from SOCSO showed that loss of employment (LOE) rose for the fourth consecutive month to 9,013 in July (Jun: 8,100), the highest since January this year. On a positive note, job vacancies rose to 242,434 (June: 103,394), providing some offset to the increase in job losses.

 

Stable outlook ahead 

Overall, we anticipate the lagged impacts from elevated material and operating costs on business activity and demand conditions to become more pronounced in 2H26. While this could cap hiring demand, employment prospects should remain broadly intact. For now, indications suggest that businesses have managed supply disruptions relatively well, while the passthrough of higher business costs to consumer inflation remains manageable. We maintain our unemployment rate forecast of 3.0% in 2026 (2025: 3.0%).

Sentiment: Positive
Read more details in:

Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.078795 4.106433
EUR 4.719654 4.723326
CNY 0.606355 0.606824
HKD 0.519557 0.523596
SGD 3.183816 3.205474