There’s been a dearth of posts on this blog for the past couple of weeks, mainly for two reasons: first, I had some deadlines to meet last week, and second, I took my year end holiday a little early – four days exploring the Forbidden City and climbing the Great Wall of China, among other things. No email, no twitter, no calls from the office…bliss.
Now its back to covering the Malaysian economy, though things will be a little slow as I catch up on data releases, news developments and the backlog of messages and posted comments. My view of 3Q2013 GDP should be out tomorrow (it was released last Friday), but first up is something a little easier to look at.
September data on employment was released today, and there’s something funny going on (‘000):
The Malaysian economy added 131k jobs in September (208k seasonally adjusted), while the 6-mth moving average rose to 142.9k. These are the kind of numbers we haven’t seen since 2010-2011, when the post-recession recovery phase was at its height and before Europe’s debt crisis started affecting global growth. This serves to underscore (and partly explains) the acceleration in GDP growth in 3Q2013.
Unemployment, too, is trending down (% labour force):
It’s still a little elevated relative to recent lows, but that’s largely due to accelerating growth in the labour force (‘000):
Part of that is a new foreign labour registration exercise, which began in September.
Here’s the unusual bit:
The red line is the actual LFPR, while the blue line is the trendline from 2009 to 2012.
I first noticed this divergence a month back, prepping for a presentation on the impact of a minimum wage(details of that to be published soon). The labour force participation rate has been generally trending up over the length of this monthly employment series, which begins in 2009. But sometime in 2Q2013, it suddenly started to shoot up. What had previously taken a year or two in terms of the economy absorbing excess labour, suddenly was covered in a month.
A couple of things come to mind. First is that businesses are more confident that the current growth phase has legs, in particular that stemming from external demand. Having ongoing big infrastructure projects certainly doesn’t hurt. Second, this could be due to the implementation of the minimum wage as higher incomes increase domestic demand, as well as entice more workers to enter the formal labour force. I’ll have more to say on this subject next week.
September 2013 Employment report from the Department of Statistics