SA’s unemployment rate drops to its lowest level in six quarters
The biggest job gains in the third quarter of this year were recorded in the manufacturing, trade, construction and transport sectors, according to Statistics South Africa. By
As a somewhat encouraging sign, SA’s official unemployment rate for the third quarter of this year fell to 32.9%, its lowest level in six quarters, according to the latest Quarterly Labour Force Survey from Statistics South Africa (Stats SA).
Desiree Manamela, the acting chief director of labour statistics at Stats SA, says 204,000 jobs were gained between the second and third quarters of this year, pushing the number of unemployed people down 269,000 to 7.7 million, while the number of discouraged jobseekers fell by 54,000 to 3.5 million over the same period.
“However, the number of people who were not economically active for reasons other than discouragement increased by 264,000, resulting in a net increase of 210,000 in the not economically active population,” she says. These changes shifted the official unemployment rate down to 32.9%.
The biggest job gains were recorded in the manufacturing (123,000), trade (82,000), construction (46,000) and transport (33,000) sectors, while the finance sector lost 80,000 jobs and the mining and agriculture sectors shed 1,000 jobs each.
Thanda Sithole, a senior economist at FNB, says that, at 32.9%, the unemployment rate is still “stubbornly sticky, but … better than Bloomberg’s consensus expectation of 33.5%”.
He adds: “While the sustained quarterly momentum in net employment gains is encouraging, the more robust net job gains compared with a year ago reflect the lower base from the broader effects of the July 2021 social unrest.
“Overall, the better labour market outcome for the third quarter corroborates our view that economic growth lifted in the third quarter, following a 0.7% quarterly decline in the second quarter.”
Digging further into the employment statistics shows that people in the 35 to 44 age group had the biggest jobs increase at 127,217, while the younger age group of 25 to 34 only took on another 9,898 jobs.
Sithole says that although employment remains below the pre-pandemic level, it is encouraging that the labour market has gained momentum.
“We expect the recovery in employment to continue, albeit protracted, especially given the prevailing domestic and global headwinds. The domestic economy will primarily be characterised by slowing global growth and persistent load shedding over the next 12 to 18 months.”
‘Reforms are needed’
Adriaan Pask, the chief investment officer at PSG, says that to ensure an upward trend in employment, both the private and public sectors must accelerate the implementation of structural and pro-business reforms to unlock investment, reduce costs and increase competitiveness and growth.
“The decrease [in unemployment numbers] is also in line with our previous comment that although the pandemic has lasted far longer than anticipated, we expected the employment situation to stabilise at pre-pandemic levels this year as vaccination rates rise and more workers return to the labour market,” he says.
Economist Lara Hodes of Investec notes that consumers remain constrained, with real incomes down notably, owing to elevated inflation, which is sitting at 7.6% for October 2022.
“Moreover, borrowing costs have risen, with interest rates up markedly this year, weighing heavily on the indebted. Going forward, a large pick-up in consumer and business confidence is imperative to drive sustainable growth and, accordingly, job creation,” she says.