Big trade surplus offsets lost jobs
Data from the revenue service showed that the trade balance recorded a healthy R12billion, much better than the market consensus of a R5bn surplus. But unemployment rose further in the second quarter to 27.20percent from 26.70in the first quarter.
Expanded unemployment rate, which includes people who have given up on looking for a job, surged to 32.2percent.
Statistics South Africa (StatsSA) said the embattled manufacturing sector led the jobs bloodbath with 108000 jobs during the quarter while community and social services shed 96000 jobs and trade 58000.
The rand surprisingly held firm and had gained 0.0499 percent at R13.0942 against the dollar by 5pm yesterday.
“The rand showed its resilience yesterday as it continued its journey down to the R13 mark.
"As global trade tensions ease and investors once again seek yield in emerging markets, the rand is enjoying some respite for the time being,” Bianca Botes of Peregrine Treasury Solutions said.
However, StatsSA said the transport sector added 54000 jobs, construction 45000 and mining 38000 to the unemployed number.
Chief economist at Citadel Maarten Ackerman said the cutting of jobs in the manufacturing did not bode well for the economy.
“Given the current skills base in the country's labour market, this is one of the key industries for absorbing job seekers," Ackerman said.
The manufacturing sector had hoped to reap the benefits of President Cyril Ramaphosa’s “new dawn”, but the data available suggests it will be a long slog for the troubled sector. The manufacturing and mining sectors played a significant role in the multi-year first quarter decline of 2.2percent in gross domestic product (GDP).
Manufacturing plunged 6.4percent in the first three months of the year, the biggest drop since the second quarter of 2015, and reversing from a 4.3percent gain in the last quarter of 2017.
The uncertainty-prone mining sector contracted 9.9percent during the first quarter, extending the 4.4percent drop in the fourth quarter, mainly due to the decreased production of gold, platinum group metals and iron ore.
“With the country’s GDP forecast being revised lower, and still depressed business confidence, it is unlikely that there will be any real improvement in the unemployment rate over the medium term,” Jason Muscat, senior economic analyst at FNB said.
The International Monetary Fund in April said that the declining in manufacturing jobs would not hurt growth or raise inequality if the right policies were in place.
NKC Africa said yesterday that the community and social services industry, which was a key job creator in recent quarters, suffered its biggest quarterly decline since the second quarter of 2016 to reflect weak domestic economic growth and tight government finances.
NKC economist Gerrit van Rooyen said the manufacturing industry also reversed its additions in the previous two quarters, in line with deteriorating business conditions.
“Without the necessary policy intervention to address growth, youth unemployment and education issues, high unemployment is likely to persist into the foreseeable future,” Van Rooyen said.
Cosatu spokesperson Sizwe Pamla said the federation expected both government and business come to the presidential jobs summit with serious plans and proposals. “We are worried that so far in the task teams they are sending junior officials with no ideas or proposals,” Pamla said.
- BUSINESS REPORT