October 2010 Employment Report

After the pause in 3Q 2010, it looks as if the Malaysian economy is accelerating again. So much for labour supply constraints…employment has hit an all time high in absolute terms (‘000):

The 410,600 jobs added in October can only partly be explained by a higher participation rate, as there’s also been an influx of new entrants into the labour market (log monthly changes):

So not only has the economy added jobs, it’s also been able to absorb a pretty strong intake of new workers. In fact, October alone has almost doubled the number of jobs the economy has added since the beginning of 2009, just before the trough in the recession (‘000):

The upshot of it all is an unemployment rate that’s exploring new depths:

Despite what I said earlier, this doesn’t look sustainable; unemployment is well below the “natural” rate of unemployment. A build up of upward wage pressure is a likely consequence – good for households, not so good for the inflation outlook. Alternatively, there will be more calls for the government to ease restrictions on immigrant labour. Either way, these are nice problems to have, in view of the continued malaise in developed markets.

I’d like to see this strength continuing for a few more months before I think the monetary policy stance needs reassessing. But this does bear watching.

Technical Notes:

October 2010 Employment Report from the Department of Statistics (warning: pdf link)