According to the Department of Statistics’ (DOSM) Business Tendency Statistics report on 29 August 2023, the majority of businesses surveyed in Malaysia (73.4%) anticipate to keep their employees in Q3 2023.
At the same time, around 17.6% are expected to hire more while 9% intend to reduce headcount. Comparing these figures quarter-on-quarter, an increase was observed in terms of retention but a decline in hiring and headcount reduction:
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In Q2 2023, 67.7% of businesses anticipate in keeping their employees
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23% anticipate hiring more employees
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9.3% anticipate to reduce headcount
Year-on-year, anticipation on retention, hiring and headcount reduction in Q3 2022 stood at 69.6%, 20.9% and 9.5%.
Looking at the overall expectations of businesses performance in the upcoming few months, the respondents foresee an improving business situation in Q3, with a positive confidence indicator of 0.7% (up from -3.1% in Q2 2023).
For context, DOSM shared that a confidence indicator is a short-term indicator which summarises the overall views of the business situation in various sectors in Malaysia. It is computed as the average of the net balance for selected variables, which represents the difference between the percentages of establishments that shared responded favourable and unfavourable responses.
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According to the report, the positive business expectations for the quarter are bolstered by the services and industry sectors.
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Services sector continues to be optimistic about the business outlook with a confidence indicator of +6.1% as compared to +3.9% in the preceding quarter.
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Industry sector saw an upturn to a positive trajectory by posting +1.3%, against -2.1% recorded in the previous quarter.The better perception in the industry sector is backed by two sub-sectors, namely agriculture and mining, both of which expect favourable business conditions in Q3, DOSM added.
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Construction sector has been anticipating negative business conditions, with a confidence indicator of -26.9% in Q3 2023.
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Wholesale & retail trade sector remains pessimistic, though with an improved confidence indicator of -1.5% (Q2 2023: -10.2%)
Next, taking on a six-month view, business sentiments for the six months ending December 2023 remain upbeat, albeit at a lower net balance of +13.9% (Previous: +14.9%). As shared by DOSM, the positive outlook is underpinned across all sectors, thus indicating improved business conditions in the period.
By sector, the services sector anticipates a favourable business situation in the six months, with a net balance of +27% as against +30.1% recorded for April to September 2023. Similarly, the industry sector expects a better business situation, recording a net balance of +9.7% (Previous: +15.6%). These six months also see more good news, with the wholesale & retail trade and construction sectors turning optimistic on the business situation for H2 2023:
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Specifically, sentiment within the wholesale & retail trade sector increased with a net balance of +7.2%, aided by a better outlook in the wholesale trade sub-sector.
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The construction sector also foresees a positive business condition, with a net balance +2.6% compared to -7.7% recorded previously.