PETALING JAYA: The labour market is projected to remain resilient in 2026, supported by strong domestic demand and structural shifts in key industries even as global uncertainties cloud the external outlook.
Growth in services and high-value manufacturing is forecast to underpin employment, cushioning the impact of geopolitical tensions and trade volatility.
However, risks linked to energy prices and global conflicts could test hiring momentum across sectors. Research houses broadly agree that domestic drivers will continue to anchor employment conditions.
BIMB Research said: “Malaysia’s labour market is expected to remain resilient despite heightened global uncertainty, underpinned by firm domestic demand and a tourism uplift from the Visit Malaysia 2026 campaign.”
Besides the campaign-led tourism recovery, the research house said the electrical and electronic (E&E) sector’s structural shift toward higher-value activities such as artificial intelligence and advanced semiconductors could support the country’s labour market, even though export-oriented industries may face pressure.
“Overall, the unemployment rate is projected to average around 3.1%, with continued job creation expected in domestically driven service sectors amid resilient consumer demand,” BIMB Research said.
TA Research similarly expects steady conditions. However, it cautioned: “Risks remain tilted to the downside, particularly from external uncertainties that could weigh on business sentiment and, in turn, hiring intentions.”
Additionally, TA Research maintained its jobless rate forecast at 2.8% for 2026.
“Trend-wise, hiring activity moderated during the month, likely reflecting base effects following the strong employment expansion recorded throughout last year.”
The research house said, “The month-on-month decline in the unemployment rate suggests that labour market conditions continue to tighten at the margin.
“This also points to limited slack in the labour market, which could support continued wage growth,” it noted.
Apex Securities expects overall stability, but flagged mounting cost pressures.
In a more adverse scenario, it said, shortages of key inputs and inventory drawdowns could begin to affect production, leading to reduced working hours and potential layoffs of temporary workers.
Hong Leong Investment Bank Research also struck a cautious tone, stating: “In the near term, the labour market is expected to remain stable, supported by domestic demand and continued E&E export activity. An immediate deterioration in the labour market is unlikely at this juncture.”
However, it noted that downside risks remain amid a highly fluid global environment, with Bank Negara Malaysia expected to keep the overnight policy rate at 2.75%.
For context, Malaysia’s unemployment rate held steady at 2.9% in February.
Meanwhile, an analyst said the labour market outlook remains constructive but not without vulnerabilities.
“While headline unemployment is likely to stay low, the composition of jobs and pace of wage growth will increasingly depend on how firms navigate margin pressures and shifting global demand.”
