SA’s latest unemployment rate has surprised, falling to its lowest since the first quarter of 2021 and marking the largest recorded improvement in the labour market since the current employment data series started.
But even though SA has created a record 1.48-million jobs over the past year — 81% in the formal sector of the economy — the employment numbers are still not back at their level before the Covid-19 pandemic. The economy has added back a total of 1.62-million jobs since the initial Covid-19 restrictions were introduced in early 2020.
Stats SA data shows a mixed performance by the various industries during the quarter, with manufacturing, trade, construction and transport creating the highest number of jobs.
The financial sector performed poorly, shedding 80,000 jobs after creating 128,000 in the second quarter, while the agricultural and mining industries lost 1,000 jobs each in the third quarter.
But even with the significant year-on-year improvement, the SA labour market is still 615,000 jobs below the peak employment level last seen in quarter four of 2018.
Stats SA said on Tuesday that the unemployment rate fell by an entire percentage point, from 33.9% in the second quarter to 32.9% in the third and below the consensus forecast of 33.4%.
Results show that the unemployment rate according to the expanded definition — including people who have stopped looking for work — decreased by a percentage point to 43.1%, from 44.1% in the second quarter.
The fall in the unemployment rate is not in congruence with the country’s growth patterns, as increases in formal employment suggest the economy should be booming but GDP growth forecasts have been revised systematically lower in recent months.
The Reserve Bank has over the past three meetings of the monetary policy committee changed its risk assessment of SA’s economic growth to more negative, downwardly revising GDP growth to 1.8% in November from September’s 1.9% and July’s 2%.
Growth estimates for 2023 were reduced significantly to 1.1%, from September’s 1.4%.
Stanlib chief economist Kevin Lings said if SA had created 1.48-million jobs over the past year, the economy should be booming. “Instead, retail sales are currently in recession. Stats SA reported a quarter-on-quarter decline in retail spending during quarters two and three, while most other economic sectors have lost momentum during 2022,” Lings said.
“It is also logical to argue that with interest rates on the rise, the inflation rate above household income growth, consumer and business confidence depressed, and global growth slowing, the SA economy would be under pressure and not necessarily creating a record number of jobs.”
Lings said despite the reported job gains over the past year, it seems clear that the SA economy has failed to keep pace with the growth in the population over an extended period and that the Covid-19 pandemic aggravated an already desperate situation.
Africa economist at Oxford Economics Jee-A van der Linde said the latest employment numbers indicate that the economy continues to recover from the pandemic-induced lockdowns. “That said, the latest drop in the unemployment rate does not necessarily imply that real GDP grew at a faster pace in quarter three,” he said.
Nedbank economist Johannes Khosa said even though the decline in the unemployment rate in such a challenging macroeconomic environment is encouraging, the outlook for the job market remains uncertain.
This is because business confidence deteriorated further, with the RMB/BER business confidence index remaining below the neutral 50-point level for the sixth consecutive quarter in the fourth quarter, falling to 38 — its lowest since the second quarter of 2021, he said.
“Internationally, the key concern [on job creation] is the impact of slowing global growth, which will hamper the performance of export-orientated industries,” Khosa said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.