July 2012 Employment Update

Last week’s employment figures shows employment growth hitting 200k jobs for July – but so did labour force growth:

The upshot is an unemployment rate that is finally off its all time low:

If you’re wondering why I’m painting an increase in unemployment as cheery, its because its really signalling that labour constraints are easing a little – i.e. less scope for inflationary pressures.

Realistically, while it would be great to have a job for every person willing to work, there’s always some unemployment in a dynamic economy – some companies go bust, some workers are transitioning between jobs, and some of working age are in, or have gone back to, school.

So some degree of unemployment is in a certain sense “natural”, though I’m wouldn’t fully subscribe to a natural rate of unemployment, which is too rigid a concept for my taste.

On the other hand, is higher unemployment for July a sign that the global slowdown is hitting Malaysia? The way I read it, no – it’s a factor of a higher number of entrants into the workforce, and not necessarily employment losses. Job creation is in fact pretty strong – or it would be if I really trusted the DOS figures.

In any case, you can’t also discount the Ramadhan effect, which should hypothetically boost employment temporarily.

Technical Notes:

July 2012 Employment Report from the Department of Statistics (warning: pdf link)