By Jason Muscat, FNB Senior Economic Analyst.
South Africa’s unemployment rate in 1Q18 was unchanged from 4Q17 at 26.7%. Of the 307,000 new entrants to the labour force, 206,000 were absorbed and the labour force participation rate edged higher to 59.3% from 58.8% in 4Q17.
The number of employed people increased 1.3% q/q and 1% y/y to 16.4 million individuals, with the formal sector adding 111,000 jobs in the quarter, and the informal sector another 93,000 jobs.
Despite the employment rate having held steady, the number of unemployed individuals within the labour force climbed by 100,000 in 1Q18, with a quarter of a million more people falling into the “discouraged work-seekers” category (up 22.4% y/y), pushing the expanded unemployment rate to 36.7% from 36.3% in 4Q17.
The sectors which added the most jobs in the quarter were community, social and personal services, (95,000 q/q), manufacturing (58,000) ), construction (40,000), trade (36,000), and financial and business services (30,000). These gains were offset by 41,000job losses in the transport sector, 14,000 in the mining sector and 6,000 among utilities. The number of jobs in the agriculture sector fell by 3,000 q/q and 28,000 y/y. The transport, utilities, mining and agriculture sectors shed jobs on both an annual and quarterly basis. The country’s two biggest provincial economies, Gauteng, and Kwa-Zulu Natal, were the only two provinces to see a drop in their respective employment rates.
Overall, the numbers were broadly in line with expectations, and we continue to remain downbeat on the prospects for meaningful declines in the unemployment rate. Despite the forecast for economic growth of approximately 2% this year, GDP will have to grow at more than double this rate in order to appreciably absorb new entrants and those that have grown despondent about finding employment.