As I have written last week, Malaysia’s 6.4% real GDP growth from a year ago in the fourth quarter of the year hides actual relative weakness in the economy. Consumption growth, investment growth and government expenditure growth slowed. Trade contracted. What contributed to faster overall growth was that both exports and imports decreased in a way that made trade surplus erosion less bad. A drop in imports was the reason for high growth.

That is from the demand side. The weakness can be also be seen from the supply side, specifically, from the labor market.

The Department of Statistics late last week released its monthly labor survey report, which does typically receive much less fanfare. The report simply backs up what I wrote, that economic growth in the fourth quarter was weaker than what the headline GDP number suggests. And definitely less of a bang than most politicians (and pro-Barisan Nasional journalists) suggest. But forgive them. It is an election year.

The average quarterly unemployment rate in the fourth quarter was approximately 3.1%, which was slightly higher than rates in the earlier quarters. Using the Department of Statistics’ seasonal adjustment method, the average quarterly rate came at 3.3%, and that created even more divergence when compared to seasonal adjusted rates in other quarters in the year. You can see the rates here:


It needs to be said that in the wider scheme of things, the unemployment rate is low. Just to stress on the grand-scheme-of-things perspective, here are the monthly rates which the quarterly rates are derived from (note the vertical axis and contrast it with the previous chart):


Nevertheless, I think the actual weakness of the economy can be seen clearer in the retrenchment statistics as released by the by Ministry of Human Resources (which is an even less observed statistics in the financial industry):


That is a big jump. Not as big as those seen in 2009 recession. I have not run any regression to investigate this further but it does appear to say something about the economy in the fourth quarter.

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