KUALA LUMPUR: Malaysia's job market is poised to benefit from the domestic demand next year, along with international borders reopening, revival of construction projects, expansion of primary sectors thanks to elevated global commodity prices and modest external trade activities.
MIDF Research said in addition, the domestic politics temperature was decided to cool down post 15th General Election and would allow for better and smooth implementation of fiscal policy.
"We believe stimulus bullets for labour market recovery and domestic economic growth will be among the major elements in the upcoming Budget 2023 and mid-term review of 12th Malaysia Plan," it said in a note.
It said recovery of Malaysia's labour market continued as the unemployment rate stayed at 3.6 per cent in October.
Youth aged 15-24 unemployment rate is still at a double-digit rate of 12.1 per cent, more than two-year low but remained higher than pre-pandemic (2019: 10.4 per cent).
Labour force and employment continued expanding 2.6 per cent year-on-year (YoY) and 3.4 per cent YoY respectively, supported by robust domestic economic growth and an upbeat external front.
Unemployment dropped further by 14.6 per cent YoY, marking the 14th consecutive month of contraction rate.
"Number of job vacancies declined to 343,000 in August from the peak point of 508,000 registered in June.
"Even though the lowest since January, monthly average job vacancies for 2022 remain the highest at 435,500.
"This reflects strong recovery in domestic economic activities fuelled by robust local demand and continuous expansion in the external sector," it said.
On the global front, the United States labour market remained firm as the jobless rate was maintained at 3.7 per cent in November.
Despite the energy crisis and inflation pressure, the Euro Area's jobless rate declined to a new record low at 6.5 per cent in October.
Across the globe, China's jobless rate maintained at a three-month high of 5.5 per cent following resurgence of Covid-19 infection in several cities.
"Labour market in Malaysia is expected to strengthen further in the fourth quarter of calendar year 2022 underpinned by upbeat momentum in the domestic economy and steady expansion in the external sector.
"Following domestic reopening and strong economic fundamentals, Malaysia's unemployment rate is projected to trend lower this year to 3.8 per cent in 2022 (2021: 4.5 per cent)," state MIDF Research.
Moving into 2023, the firm foresees Malaysia's jobless rate to skid further at an average of 3.5 per cent on the back of improving domestic economy, uptick in tourism-related activities and higher output capacity in primary sectors as commodity prices stay elevated.