Unemployment rate improves slightly to 27.1% as banks add jobs

By Prinesha Naidoo and Amogelang Mbatha

(Bloomberg) – South Africa’s unemployment rate remained near a 15-year high in the final quarter of 2018, even as the finance industry added more than 100,000 jobs.

The unemployment rate fell to 27.1% from 27.5% in the three months through September, Statistics South Africa said in report released Tuesday in the capital Pretoria. The median estimate of six economists surveyed by Bloomberg was 27.5%.

Key insights

  • The improvement in the rate may reflect an increase in temporary jobs over the festive season, particularly in the retail industry, said Mamello Matikinca, the chief economist at FirstRand Ltd.’s First National Bank unit, in a note before the data release.
  • At 109,000, the finance industry added the most jobs while community and social services, which include the government, cut 51,000 positions.
  • Africa’s most-industrialised economy hasn’t grown by more than 2% a year since 2013, stifling job creation.
  • Economists, including Investec Bank Ltd.’s Kamilla Kaplan, say gross domestic product must expand by 3-5% annually for the unemployment rate to recede.
  • President Cyril Ramaphosa pledged growth of as much as 5% a year in his campaign for leadership of the ruling African National Congress. He used his state-of-the-nation-address last week to highlight deals brokered at a presidential jobs summit, which could create 275,000 jobs a year, and plans to focus on policies in labor intensive sectors.
  • The South African Reserve Bank said the economy probably grew by 0.7% in 2018 after emerging from a recession in the third quarter.