Malaysia's services sector, which makes up around half of the nation's economy, expanded by 6% year-on-year to RM630 billion in the first quarter of 2025, according to the Department of Statistics Malaysia (DOSM).

The growth was driven by strong consumer spending, a rebound in tourism, and rising demand for digital and professional services.

Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin noted that all segments within the sector recorded growth.

The wholesale, retail, food and beverage, and accommodation categories rose by 5.3% to RM475.7 billion, supported by festive season spending during Chinese New Year, Ramadan, and Aidilfitri, as well as a 31.3% surge in tourist arrivals and increased domestic travel, The Edge Malaysia reports.

In addition, the information, communication, and transport sectors grew by 5.9% to RM87.9 billion in Q1, supported by rising demand for digital services and a 3.8% increase in telecommunications activity.

Air travel and passenger traffic recorded gains of 9.2% and 11.8% respectively, while courier and delivery services continued to expand, driven by sustained growth in e-commerce.

Furthermore, the professional, real estate, and administrative services sector expanded by 10.4%, driven by increased demand for engineering, accounting, and architectural services, along with a surge in real estate activity.

Real estate growth was particularly strong, up 13.5%, supported by stable interest rates and government housing initiatives. Travel agencies experienced a 13% increase, while office services saw a significant rise of 16.9%.

The private healthcare, education, arts, entertainment, and personal services sector also grew by 11.1%. Healthcare services saw a significant rise of over 14%, driven by increased demand for wellness and preventive care, while private education grew by 7%.

Arts and entertainment expanded by 12.1%, and personal services, such as grooming and laundry, experienced a 9.9% increase.

Meanwhile, e-commerce revenue totalled RM310.6 billion in Q1 this year, reflecting a 3.4% year-on-year increase and a modest 0.1% growth from the previous quarter.

Mohd Uzir also reported that 4.5 million people were involved in the sector, a 1.9% rise compared to last year, with the transport and storage sector driving the growth.

Moreover, salaries and wages in the services sector increased by 4.1% year-on-year to RM33.6 billion, with a quarterly growth of 1.0%.