Kuala Lumpur, 11 September 2025 – Malaysia’s labour market continued to show resilience in July, with the unemployment rate holding firm at 3.0%, even as global trade frictions and external uncertainties put pressure on business confidence.
According to the Department of Statistics Malaysia (DOSM), the number of unemployed persons edged up 0.6% month-on-month (MoM) to 521,600, marking the first monthly increase since July 2021. On a year-on-year (YoY) basis, however, unemployment remained on a declining trend, falling 5.7%, though easing from June’s 6.3% contraction.
Job Market Dynamics
A closer look at unemployment duration showed mixed signals. The proportion of jobless individuals for less than three months slipped slightly to 64.3% (June: 64.5%), while those unemployed for longer periods ticked higher—20.4% for three to six months and 5.1% for more than a year. The number of actively job-seeking individuals also rose marginally to 416,200 (June: 414,400).
Despite the small uptick in unemployment, overall employment growth stayed positive. Total employment expanded by 3.1% YoY (June: +3.0%) and 0.2% MoM (June: +0.3%). Gains were broad-based across services, manufacturing, construction, mining, and agriculture, with the services sector continuing to lead growth, driven by wholesale and retail trade, accommodation, food & beverage, and information & communication.
By employment type, employees rose 0.1% MoM, while own-account workers—typically freelancers or self-employed individuals—expanded 0.4% MoM, though both posted slower growth than in June. Meanwhile, the number of employed persons temporarily not working fell to 89,600 from 90,100 in the previous month, suggesting some improvement in labour utilisation.
The labour force grew by 2.8% YoY (June: +2.7%), but its MoM expansion moderated slightly to 0.2% from 0.3%. The labour force participation rate (LFPR) was unchanged at 70.8%, indicating sustained engagement in the workforce.
Loss of Employment Trends
On a less positive note, the Social Security Organisation (SOCSO) reported a rise in loss of employment (LOE) cases to 6,700 in August, up from 6,400 in July. The bulk of retrenchments came from manufacturing, wholesale and retail trade, and professional, scientific & technical activities. Geographically, Selangor (25.1%) and Kuala Lumpur (23.6%) continued to account for the highest concentration of job losses, reflecting their large industrial and service hubs.
Impact of Global Trade Tensions
Analysts at Hong Leong Investment Bank (HLIB) linked July’s uptick in unemployment partly to the fallout from global trade tensions. Market sentiment weakened after former U.S. President Donald Trump’s July 7 letter proposing 25% tariffs on Malaysian goods, which unsettled exporters and investors alike. While the final tariff was negotiated lower at 19%, HLIB noted that initial jitters likely dampened hiring confidence.
Looking ahead, the research house expects the drag on sentiment to ease gradually as businesses adjust, but cautioned that external headwinds—including U.S. trade negotiations, evolving tariff regimes, and broader geopolitical risks—will continue to pose challenges for Malaysia’s open economy.
Outlook
Despite external uncertainties, HLIB maintains that Malaysia’s labour market will remain broadly stable, underpinned by supportive fiscal and monetary policies, robust investment activity, and rising tourism spending. These factors should help offset some of the downside risks from global trade disputes and keep domestic demand resilient.
The firm reiterated its 2025 GDP growth forecast at 4.0%, suggesting that while Malaysia will face external challenges, its underlying fundamentals remain intact.
