Unemployment expected to inch even higher
TSA he ’uneven s economic nature of recovery is likely to be in focus in the week ahead, with data expected to show that the unemployment rate remained at a record high in the second quarter.
Stats SA’s quarterly labour force survey, a householdbased survey that includes informal workers as well as agriculture workers and those in the domestic services sector, is due on Tuesday.
Investec economist Kamilla Kaplan expects unemployment to pick up 0.5 percentage points quarter on quarter to a new record of 33.1%, warning that it is expected to remain at or near record highs for the rest of the year given a gradual economic recovery.
“Though economic conditions have been improving, much of the impetus has stemmed from higher international trade momentum and higher commodity prices,” she said in a note.
In the first quarter unemployment was at a record 32.6% from 32.5% in the fourth quarter of 2020. A Covidinduced slump of 7% in GDP in 2020 put an estimated 1.4-million people out of work.
Professional services firm PwC has warned that SA should expect a limited labour market recovery in 2021, to in a report on SA an’ s unemployment rate of about 32.3%. It forecast 32.4% for end2022 economic outlook earlier in August that “signals the start to a slow upward trend over the long term as local job creation continues to lag behind the needs of a growing labour force”.
“In the first quarter of this year, SA had 11.4-million unemployed adults after a net 1.4-million jobs were lost in 2020. We expect only 315,000 of these lost jobs to be recovered in 2021 as economic growth is held back by lockdowns, unrest and loadshedding,” PwC said.
Where SA’s economy is faring well should be evident on Monday, when Stats SA is due to release its mining production figures for June. The data is expected to show 21.1% yearon-year growth in the last month of the second quarter, though this is a moderation from May’s 21.9% rise.
Surging prices of commodities, including iron ore and gold, have bolstered the rand in 2021, helping the country book hefty trade surpluses. It has provided record profits and dividends by a number of miners, and supported government finances through higher taxes.
On Wednesday, Stats SA will announce the results of a review of statistics and methods for determining GDP, which is done every five years to ensure statistics remain relevant and to reflect structural changes to the economy.
Independent economist Elize Kruger said typically, with new information about the economy being incorporated, the exercise has resulted in upward revisions to historical GDP data and could have an important effect on key economic ratios, such as debt to GDP.
Producer inflation data for July is due on Thursday, with the consensus among six economists polled by Bloomberg for a moderation to a 7.1% year-on-year rise, from 7.7% in June.
Oil prices fell sharply in 2020 as Covid-19 hit but have risen in 2021 as global economies reopened, providing a low base for high inflation rates, an effect that is expected to wane this year.
Also on Thursday, the National Energy Regulator of SA is scheduled to make a decision on Eskom’s application to recover R8.4bn for 2019/2020.
“As the economy already buckles under the most recent double-digit electricity tariff increase, this could mean more bad news for future electricity tariff increases,” said Kruger.