PETALING JAYA: Overall labour market conditions in the country are expected to remain stable into 2027, with the unemployment rate to stay in the 3% level as economic growth support job openings.
Analysts forecast the economy to stay at full employment in economic terms, with unemployment to hover around 3% into 2027 on a combination of sustained domestic investment into projects, consumer spending and tourism-related activities.
TA Research projects the unemployment rate to average 2.8% to 3% in 2027, after government data released on Nov 11 showed September unemployment remained broadly stable at 2.9% and unchanged at 3% in the third quarter of financial year 2026 (3Q26).
“We see scope for unemployment to move towards 2.8% if the momentum from Visit Malaysia 2026 carries into 2027 and hiring outpaces labour force growth.
“Geopolitical tensions could redirect some travellers towards destinations they perceive as safer, allowing Malaysia to capture a larger share of regional travel demand,” it said.
The research house added that stronger visitor spending would support hiring in hospitality, food and beverage, retail and transport, while the rollout of approved investments should sustain demand for workers in construction and related services.
“We expect unemployment to stay closer to 3% if weaker external demand slows manufacturing hiring or investment projects are delayed,” it said, adding that the main risk remains slower hiring as the labour force expands.
“Weaker external demand or renewed trade restrictions could prompt export-orientated manufacturers to cut overtime or defer recruitment.
“Delays in investment projects would also push back hiring in construction and related services,” it said.
The labour force expanded 0.1% month-on-month to 17.4 million persons while the labour force participation rate stood at 71%, flat against August.
On an annual basis, the labour force contracted 0.8% year-on-year (y-o-y), partly reflecting the high base following stronger expansion a year earlier.
Apex Securities has maintained a steady outlook for the labour market, projecting the unemployment rate to stay at 3% in both 2026 and 2027, from 3% in 2025.
It noted that continued labour market resilience supports its 2026 gross domestic growth (GDP) forecast of 5% y-o-y, although an upward revision may be in the cards following 3Q26 GDP’s final figures on the back of stronger growth this year.
“We maintain our 2027 GDP growth projection at 4.5%,” it said.
It said employment should remain supported by strength in export-orientated industries, particularly the electrical and electronic segment, given expectations for continued resilience into 2027.
On the domestic front, the Visit Malaysia 2026 to 2027 campaign should support tourism spending and hiring demand particularly in the retail, transportation and accommodation segments.
It warned that elevated costs such as the minimum wage hike to RM2,000 next year could add to cost pressures and weigh on hiring decisions, although the overall impact remains manageable.
