Unemployment decreases slightly

OCTOBER 30, 2014

South Africa’s unemployment rate decreased slightly from 25.5% in the second quarter to 25.4% in the third quarter.

In its Quarterly Labour Force Survey (QLFS), Statistics South Africa (Stats SA) said that unemployment decreased by 0.1% with increases in employment seen in both the formal and informal sectors.

Quarterly, large employment gains were seen in the formal sector’s construction (66 000), trade (48 000) and mining (23 000) industries. In the informal sector, the largest gains in employment were observed in the construction (33 000), manufacturing (14 000) and transport (10 000) industries over this period.

“Compared to the same period last year, employment increased by 81 000. Large annual employment gains were observed in community and social services and construction industries at 140 000 and 135 000 respectively. The largest decreases in employment were observed in private households at 83 000, agriculture 54 000 and manufacturing at 38 000 industries,” said Stats SA.

The survey, which polls households, found that the number of employed people increased by 22 000 in the third quarter. In the third quarter of 2014, the number of unemployed people decreased slightly by 3 000 to 5.2 million.

In the third quarter, the expanded definition of unemployment, which includes people who have stopped looking for work, was at 35.8% in the third quarter from 35.6% in the second quarter.

In reacting to the news, analysts said that the private sector is likely to remain reluctant to expand capacity and grow employment given a struggling local economy.

“While the public sector has buoyed employment until recently, October's Medium Term Budget Policy Statement (MTBPS) suggest a new resolve to reduce the budget deficit and contain the nation's debt burden by, among other things, controlling growth in public sector employment and wage increases. Conditions in the labour market will therefore remain tight until the economy accelerates more convincingly,” said Nedbank economists.

The economists further added that the data confirms that economic activity remains too weak to generate the levels of confidence needed to expand capacity and grow employment significantly.

“The numbers are not likely to change the Reserve Bank's stance, with focus likely to remain on the outlook for growth and inflation. Most recent indicators suggest that economic activity remains weak although there are early signs of recovery in some sectors.

At the same time, inflation has generally surprised on the downside and some of the key risk factors to the inflation outlook have eased in recent months. Global food and oil prices have declined sharply, while the rand has proved more resilient than most anticipated.

“Although these positive developments have reduced the chances of another 25 basis point hike before year-end, we still expect a hike in November followed by more tightening in the second half of 2015 as inflation will remain elevated and the rand vulnerable to changes in risk perceptions and global monetary policies,” said Nedbank

The Reserve Bank’s Monetary Policy Committee will hold its last meeting for the year from 17 - 19 November. –SAnews.gov.za