Malaysia’s economy continued its steady growth in the second quarter of 2025, supported by improvements in labour productivity across most key sectors. According to the latest data, labour productivity per hour worked increased 3.4% in Q2 2025, up from 2.2% in the previous quarter, underscoring ongoing efficiency gains despite a challenging global environment.
The rise in productivity was accompanied by an economy that grew 4.4% year-on-year, maintaining the same rate of expansion recorded in the first quarter of the year. The country’s total value added reached RM419.3 billion in Q2, compared with RM415.3 billion in Q1.
National Productivity and Economic Performance
Malaysia’s labour productivity, measured as value added per hour worked, rose to RM43.2 per hour in the second quarter, up from RM43.0 in the first quarter. At the same time, the total hours worked in the economy increased by 1.0% to 9.7 billion hours, showing consistent demand for labour.
Labour productivity per employment also improved, rising 2.8% to record an average value added of RM24,887 per person, compared to RM24,866 in the previous quarter. This was supported by a 1.6% increase in total employment, which grew to 16.8 million persons.
Overall, these figures point to an economy that is not only expanding in size but also improving in efficiency, as more output is being generated per hour and per worker.
Agriculture Sector
The agriculture sector showed stronger productivity growth in Q2 2025, with productivity per hour worked rising 3.5%. The value added per hour reached RM25.2, compared with RM23.4 in the first quarter. This improvement was largely driven by efficiency gains, as the total hours worked in the sector actually declined by 1.3% to 1.02 billion hours.
Despite fewer hours worked, the sector’s value added 2.1% to RM25.7 billion, showing how productivity improvements lifted performance. Average hours worked per week declined slightly to 41.5 hours, reflecting adjustments in labour allocation.
Productivity per employment also increased by 2.3% reaching RM13,550 per person, even though the number of employed persons fell marginally by % to 1.9 million.
The agriculture sector’s performance highlights how efficiency gains producing more with less labour input can support growth even when workforce numbers and hours worked decline.
Mining and Quarrying
In contrast, the mining and quarrying sector continued to post weak results, with labour productivity per hour worked falling 4.6%. The value added per hour slipped to RM490.5, compared with RM551.1 in the previous quarter.
Overall value added for the sector fell 5.2% to RM22.5 billion, down from RM25.5 billion in Q1. Total hours worked decreased slightly by 0.7% to 46 million hours, while average hours per week dropped to 46.8 hours.
Labour productivity per employment contracted further, falling 5.8% to RM292,813 per person, as the sector continued to face global energy market volatility. Interestingly, total employment edged up by 0.6% to 77,000 persons, suggesting more workers entered the sector despite declining productivity and value added.
The mining and quarrying industry remains the only major sector where productivity growth is in negative territory, pulling overall figures down.
Manufacturing Sector
The manufacturing sector recorded steady expansion in the second quarter, with labour productivity per hour worked increasing 3.7%. Value added per hour rose to RM57.6, compared to RM56.9 in Q1.
Total value added grew 3.7% to RM96.9 billion, supported by stable working hours, which rose marginally to 1.68 billion hours. Average working hours per week declined slightly to 45.5 hours, showing a modest adjustment in work patterns.
Employment in manufacturing grew by 1.0% bringing the total workforce to 2.85 million persons. Labour productivity per employment rose 2.8% to RM33,972 per person, reflecting efficiency gains across multiple subsectors.
Growth was strongest in:
- Vegetable and animal oils & fats and food processing (+13.9% per hour)
- Petroleum, chemical, rubber and plastic products (+5.4%)
- Electrical, electronic and optical products (+5.1%)
- Wood products, furniture, paper products and printing (+1.4%)
- Non-metallic mineral products, basic metal and fabricated metal products (+0.3%)
However, declines were recorded in:
- Textiles, wearing apparel and leather products (-2.2%)
- Transport equipment, other manufacturing and repair (-1.9%)
- Beverages and tobacco products (-0.3%)
Construction Sector
The construction sector delivered one of the strongest performances in Q2 2025, with labour productivity per hour worked surging 9.3%. Value added per hour reached RM21.4, up from RM20.9 in the previous quarter.
Total value added for the sector rose 12.1% to RM18.1 billion, while total hours worked increased 2.5% to 844 million hours. Average working hours also rose slightly to 46.0 hours per week.
Labour productivity per employment jumped 11.0%, with value added per worker reaching RM12,728. Total employment remained steady at 1.42 million persons.
The strong productivity growth in construction reflects both increased output and efficiency, positioning the sector as a significant contributor to overall productivity improvements in the economy.
Services Sector
The services sector, Malaysia’s largest contributor to GDP, posted a 3.6% increase in labour productivity per hour worked in Q2 2025. Value added per hour rose to RM41.0, compared to RM40.9 in Q1.
Total value added grew 5.1% to RM250.7 billion, supported by an increase in total hours worked by 1.4% to 6.11 billion hours. Average hours worked per week declined slightly to 44.6 hours.
Labour productivity per employment rose 2.9% with value added per worker reaching RM23,642. Employment in services expanded by 2.1%, reaching 10.6 million persons.
Growth was broad-based across nearly all subsectors:
- Real estate and business services (+9.1% per hour)
- Transportation and storage (+7.1%)
- Other services (+6.7%)
- Wholesale and retail trade (+3.5%)
- Information and communication (+3.3%)
- Food & beverages and accommodation (+2.3%)
- Finance and insurance (+0.6%)
The only decline came from the utilities subsector, which contracted slightly at -0.4% per hour.The overall strength of services, particularly in real estate, transport, and trade, reflects robust domestic demand and continued expansion in consumer-facing industries.
Malaysia’s productivity performance in the second quarter of 2025 shows a positive trajectory, with improvements across most sectors supporting stable economic growth. The 3.4% rise in labour productivity per hour worked reflects efficiency gains, while the economy’s 4.4% expansion highlights resilience in the face of global uncertainties.
Sectoral trends point to construction and manufacturing as key drivers of growth, with agriculture and services also contributing steadily. However, the persistent decline in mining and quarrying productivity signals the need for structural adjustments in that industry.
With total employment rising to 16.8 million and productivity per worker increasing, Malaysia is demonstrating both job creation and efficiency gains, a critical combination for sustaining long-term competitiveness.
As the country continues to transition towards higher-value activities and more efficient use of labour, productivity will remain central to driving sustainable economic growth. The Q2 2025 results suggest that Malaysia is on the right track, with most sectors showing steady progress towards a more productive and resilient economy.
Shahriena Shukri is a journalist covering business and economic news in Malaysia, providing insights on market trends, corporate developments, and financial policies. More about Shahriena Shukri.
