Interest rate to stay unchanged
JOB LOSSES TO INFLUENCE RESERVE BANK’S DECISION
IT APPEARS the SA Reserve Bank will be pushed to leave the interest rates unchanged after the weak economy saw all but three sectors of the economy losing thousands of jobs in the first quarter of this year.
This is according to economist Dawie Roodt, who said he believed the economy has in the second quarter slid into recession. This spells two consecutive quarters of negative growth.
He said the poor economic growth would make it difficult for the Reserve Bank to raise interest rates when it meets on July 19-21.
Roodt said the employment numbers were not surprising, especially considering that the economy had contracted in the first quarter.
“I am, however, concerned about the job losses in the retail and services sectors because those are two robust sectors and they usually manage to keep on going whenever other sectors are underperforming,” he said.
“The domestic economy is currently experiencing stagflation: an economic period characterised by weak growth and high inflation.”
According to Statistics SA’s Labour Force Survey for the first quarter of 2016, the economy saw the employment rate decreasing by 15 000 between January and March, from 9 288 000 in December 2015 to 9 273 000.
“This was largely due to decreases in the following industries: trade (-36 000) business services (-9 000), manufacturing (-8 000), transport (-5 000) and mining and quarrying (-4 000),” read the document released yesterday.
However, increases in employment were recorded by the community services sector (44 000) and construction (3 000).
The electricity sector neither lost nor created jobs in the quarter.
The figures also saw the gross earnings of employees in the formal non-agricultural sector in the period June 2013 to March 2016 plummeting by an average 4%.
“… shows that gross earnings paid to employees decreased by almost R22-billion, from R545-billion in December 2015 to R523-billion in March 2016.
“The decrease was mainly due to decreases [in earnings] in the trade, manufacturing, construction, transport, community services, electricity and mining and quarrying industries,” read the report.
Federation of Unions of South Africa secretary-general Dennis George said he was very disappointed that the economy was continuing to shed jobs.
“We have already met with government and they have agreed to our request of a jobs summit,” said George, arguing that the summit would come up with solutions.
“All of us must do something but the private sector must do more.
“We are speaking to chief executives about how they could create space for the unemployed matrics.”