Lack of confidence a ‘brake on business’

Unemployment improved marginally in the last quarter of 2017 even as the economy struggled to create meaningful jobs, data due this week could show.

Sluggish economic growth in 2017 and job losses kept the unemployment rate stubbornly high at 27.7% for most of the year. But economists expect unemployment to retreat to 20.7% in the fourth quarter.

However, the gains are expected to be reversed in the first quarter of 2018 as the employment was seasonal for the festive period. The predicted unemployment rate average for 2017 of 27.5% is worse than the 23%-24% average during the recession of 2008-2009, according to Investec research.

Investec economist Kamilla Kaplan said policy uncertainty remained a stumbling block to restore confidence and enhance the investment climate “which would ultimately lift potential GDP growth and therefore employment rates”.

Gina Schoeman, economist at Citi, said there were signs of improvement in the business cycle but “it’s being held back by some exogenous factor. The (Reserve Bank) believes that is (lack of ) confidence”.

Official unemployment data will be published in the fourth quarter’s Quarterly Labour Force Survey on Tuesday.

On the same day the South African Chamber of Commerce releases its trade conditions survey for January 2018.

The market is likely to take a keener interest in retail trade sales for December that will be published on Wednesday and are expected to have moderated from November’s strong growth of 8.2%.

“Given the high base of the November reading, the December retail sales figure may not be as robust,” said Tumisho Grater, economic strategist at Novare.

FNB forecast retail sales growth of 3% in December.

Second-tier data releases this week include December civil cases for debt and wholesale, motor trade and building statistics.

But FNB chief economist Mamello Matikinca said it was likely that political developments concerning President Jacob Zuma would overshadow the data releases. She said the December hike could result in 2% growth for the retail sector overall. This would nudge overall GDP growth to 1%.

KAMILLA KAPLAN SAID POLICY UNCERTAINTY REMAINED A STUMBLING BLOCK TO CONFIDENCE