South African Jobless Rate at 14-Year High as Economy Stalls

JOHANNESBURG (Capital Markets in Africa) – South Africa’s jobless remained at a 14-year high in the third quarter as the continent’s most-industrialized economy staged a weak recovery from a recession.

The unemployment rate was 27.7 percent, matching the previous two quarters’ figures, Statistics South Africa said in a report released on Tuesday in Cape Town.

The economy expanded 2.5 percent in the three months ended June 30, exiting its second recession in almost a decade after agricultural output surged. Last week, the National Treasury almost halved its growth forecast for this year to 0.7 percent as business and consumer confidence dropped. It expects tax revenue to fall well short of projections made in February, and the lack of measures to mitigate against this shows the country is straying from its fiscal-consolidation path, Fitch Ratings Ltd. said.

“The high unemployment is going to be a drag on economic growth’,” Thabi Leoka, an economist at Argon Asset Management, said by phone from Johannesburg. “Growth is expected to remain below 2 percent in the next three years, which tells me that unemployment is unlikely to improve if growth and productivity is struggling to improve.”

Here are some highlights from the statement:

• The number of people without jobs climbed 33,000 to 6.2 million
• The number of people employed increased 92,000 to 16.2 million, with the finance sector adding 68,000, while positions in community and social services increased by 56,000
• The manufacturing sector lost 50,000 jobs, while positions in construction fell by 30,000 and the number of agricultural workers dropped by 25,000
• The mining sector added 12,000 jobs

The ruling African National Congress will hold a conference to elect new leadership in December, and the uncertainty leading up to this may slow efforts to implement reforms needed to raise confidence, cut unemployment and increase growth.

The government has increased the number of people it employs by 15 percent over the decade through March 2017, National Treasury data show. It forecasts an average annual advance of 7.3 percent in the public-sector wage bill through 2021, outpacing estimated growth in consumer prices, which won’t exceed 6 percent in the period.

Source: Bloomberg Business News