A day after the GDP data came out last week, a more sobering report on employment in December 2012 was issued (‘000):
The economy officially lost about 38.8k jobs in December – the seasonal adjusted number is about 5 times larger, i.e. under normal circumstances, employment should have increased.
Along with a small expansion in the labour force, that raised the unemployment rate to the second highest monthly level this year:
One thing of note here is that the unemployment data for the last six months has been really noisy – very sharp swings in both the unemployment numbers and in the unemployment rate. This has come concurrently with lower volatility in the employment, labour force and outside labour force numbers.
I don’t know whether these observations are an artifact of DOS’ surveys becoming more efficient or if unemployment really is getting more volatile. I’ve seen some anecdotal evidence of retrenchments increasing lately, and the stats say the number is up 21.6% over 2011. But that’s from a low base, and well below the level of retrenchments seen before the Great Recession.
As cold and harsh as this may sound, I wouldn’t be too concerned if unemployment does increase a little more, because the labour market might in fact be a little too tight (job vacancies are down for 2012 as well) and might lead to demand led price pressures (aka inflation) and/or higher consumer imports.
There’s a joke that goes: “An ‘acceptable’ level of unemployment means that the government economist to whom it is acceptable still has a job.” There’s some truth in that, as its a little easier to stomach higher national unemployment when you’re still getting a regular paycheck.
Nevertheless, there is some legitimate cause for concern when economic numbers deviate from their long term established levels. These past couple of years have seen Malaysian unemployment at unsually low levels. We might be seeing a normalisation of unemployment this year.
December 2012 Employment Report from the Department of Statistics (warning: pdf link)