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South Africa’s jobless rate is expected to have seen a marginal drop when the outcomes of the second quarter, Quarterly Labour Force Survey are released on Tuesday.
This comes on the back of the marginal economic growth expected this year that has continued to impede job creation, with the official unemployment rate currently standing at 32.9%. The expanded unemployment rate which includes people who’ve given up looking for work was 42.4% in the first quarter.
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7.9 million people were without jobs in the first quarter, with young people and black women being the majority of those unemployed. More than 52% of the working age population group in the Eastern Cape had no jobs in the first three months of this year. This province has the highest unemployment rate followed by Mpumalanga and Limpopo.
Post the Covid19 pandemic, unemployment levels have remained elevated following the loss of millions of jobs brought on by the lockdowns.
Investec economist Laura Hodes said:
Despite the two worst months of load shedding in the second quarter, (April and May) crucial sectors of the economy - manufacturing and mining - surprised on the upside when they delivered positive growth in June pointing to a positive contribution towards the second quarter economy growth measurement.
According to Statistics South Africa, production in the manufacturing sector rose by 5.5% year-on-year in June and on a month-on-month basis manufacturing output was up 1.2% after falling by 1.3% in May. Meanwhile mining output was up 1.1% year-on-year in June while on a month-on-month basis mining production rose by 1.3% in June after falling 3.8% in May.
Senior economist at Absa Bank, Miyelani Maluleke, stated:
"The overall performance of the manufacturing and mining sectors through the first half of this year, which has been the worst period of load shedding to date, supports the view that many big businesses are increasingly adapting and insulating themselves from load shedding-related disruptions by building their own generation capacity. After accounting for the latest June data, our high-frequency-data-based GDP tracking estimate sits at a 0.7% quarter-on-quarter growth, 0.4 percentage points higher than our published forecast, Maluleke added.
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Both these sectors shed jobs in the first quarter, with mining shedding 24 000 jobs while manufacturing lost 2 000 jobs. Employment in the manufacturing sector has been on a downward trend in the past 16 years, despite government’s attempts to create jobs through re-industrialisation using special economic zones for instance.
"In 2005, the industry employed 1.40 million individuals. In 2017, 1.18 million were employed, declining to 1.09 million in 2021. The industry has lost almost 309 000 jobs over a 16-year period, with the decline in 2021 most likely the result of the Covid19 pandemic," according to StatsSA.
The lack of jobs, high inflation and high interest rates has put a damper in household consumption.
Hodes said retail sales are likely to have slumped by another 0.5% year-on-year when the June figures are released next week. The June numbers will round off the second quarter data releases for this significant sector of the economy, giving us a clearer indication of its contribution to the quarter’s overall headline GDP reading.
"Indeed, retailer confidence dipped by a further -14% points in the second quarter with results from the BER’s retail survey indicating 'an alarming deterioration' in retailer profitability over the past 6 months,” she said.
