Manufacturing and services sectors will continue to support economic growth, labour market

PETALING JAYA: The manufacturing and services sectors are expected to continue supporting the country's economic growth and labour market, underpinned by a steady improvement in exports and domestic demand, said Ambank Research.
In a note yesterday, its chief economist Anthony Dass said its optimism is also based on the improving Nikkei Manufacturing PMI (purchasing managers' index) which, although still in the negative trajectory, is edging up to the 50 level which separates expansion from contraction.
"It was another telling sign that the overall business activities are improving modestly," he noted.
Meanwhile, Anthony said the research house projected the unemployment rate to hover around 3.3%-3.4% this year, from 3.5% in 2016.
He said this is on the back of its 4.5% gross domestic product (GDP) growth projection for 2017, which is largely supported by domestic activities and improving export-led manufacturing activities such as semiconductors and resource-based manufacturing.
Furthermore, he said the pending Employment Insurance System is also expected to provide employment stability by reducing frictional unemployment, retrenched workers as well as youth unemployment via wage subsidies.
The unemployment rate remained unchanged for the third consecutive month in February 2017 at 3.5% while the labour force participation rate (LFPR) inched up slightly to 67.8% from 67.7% in January.
Nevertheless, Anthony noted that the number of people employed remained in the positive growth for the second straight month and rose to 35,000 in February.
In tandem with the increase in employment, he said the number of people employed in the manufacturing sector grew 1.4% year-on-year (y-o-y) to 1.04 million persons, although the wage growth has slowed to 0.3% y-o-y.
"People outside the labour force is at 32.2% of the working age population, suggesting a trend of self-employment in the labour market.
"Meanwhile, the Social Security Bill 2017 aimed at self-employed taxi drivers and e-hailing service providers seeks to provide Socso (Social Security Organisation) protection via 1.25% of monthly income contribution," he added.