Jobless figure likely to remain high in quarter

Unemployment may have remained high during the second quarter of 2017, underscoring the weakness of an economy in recession, data to be released this week is forecast to show.

SA’s unemployment rate reached 27.7% in the first three months of 2017 — the highest in 14 years — after growth in job seeker numbers was faster than a rise in employment.

The Statistics SA announcement of the second quarter rate in the Quarterly Labour Force Survey on Tuesday is likely to attract attention this week.

This will be preceded by the Organisation for Economic Cooperation and Development (OECD) Economic Survey of SA which the OECD and the Treasury will publish in Pretoria on Monday.

This document is likely to illustrate how low growth and high unemployment are weighing on social progress.

Economists differ on what the unemployment reading is likely to be. First National Bank (FNB) forecasts a rise in unemployment to 27.8%, but Investec believes the rate may improve to 27.5%.

FNB economist Mamello Matikinca said: “Weak business confidence in [the second quarter] likely weighed on employment prospects.”

A survey measuring sectoral confidence, which dipped below the 50-point neutral mark, “pointed to labour shedding in the manufacturing sector” in the past two months, Matikinca said. A reading below 50 indicates a possible contraction in the industry.

Investec economist Kamilla Kaplan said the unemployment rate “could see a slight dip to 27.5%, on temporary seasonal effects” but the rate was “still projected to rise to 27.8% in 2017 from 27.0%” in 2016.

Low business confidence, constrained investment and weak consumption expenditure remain challenges.

The release on Tuesday of the Reserve Bank’s leading indicator, a gauge of growth, is likely to provide further clues to the state of the economy.

Statistics SA will publish data on producer inflation on Thursday. It is forecast to have moderated to 4.6% in June compared to 4.8% in May as food and fuel price dynamics improve, according to Kaplan.

Food and fuel hold the largest weightings in the producer price index basket.

Manufactured food price inflation has decelerated from a peak of 13.4% in August 2016 to 5.7% in May 2017.

Kaplan said price pressures related to intermediate nonfood manufactured goods also moderated in May, suggesting weaker producer inflation.