The unemployment rate in South Africa surprised to the downside after falling to its lowest in a year in the three months to September as the economy continued to add more jobs, driven mainly by rising jobs created in finance, community and social services, domestic trade and construction sectors.
However, industry experts warned that the country was not out of the woods yet as economic activity was still dependent on resolving unreliable electricity supply and logistical bottlenecks which have stifled South Africa’s exports prospects.
The Quarterly Labour Force Survey released by Statistics South Africa (StatsSA) yesterday, revealed that the unemployment rate fell by 0.7 of a percentage point from 32.6% in the second quarter to 31.9% in the third quarter.
This was the lowest jobless rate since the third quarter of 2020, as the number of employed persons increased by 399 000 to 16.7 million in the third quarter compared to 16.3m in the second quarter.
StatsSA said the number of unemployed persons decreased by 72 000 to 7.8m during the same period.
The sectoral breakdown shows that most of the jobs were created in the services industries, with the financial sector leading the pack with 237 000 jobs, followed by the community and social services, which includes government, at 119 000 jobs.
Agriculture, construction and domestic trade also recorded employment growth over the quarter.
Statistician-General Risenga Maluleke said the labour market had clawed back losses seen during the Covid-19 pandemic where there was an onslaught of jobs.
“For three quarters prior to when we were in the first quarter of 2020, when we were in the highest levels of Covid-19 – we were sitting at 16.4 million people employed,” Maluleke said.
“So 16.7 million people is the first time we see ourselves higher than the pre-Covid times.”
However, energy-intensive industries such as mining and manufacturing reflected the sharp deterioration in performance amid the drag stemming from weaker global demand, lower commodity prices, limited electricity supply and worsening logistical challenges.
Manufacturing and mining shed 50 000 and 35 000 jobs, respectively, while transport and utilities fell by 20 000 and 16 000 jobs, respectively.
StatsSA said the number of people who were not economically active for reasons other than discouragement fell by 160 000 to 13.1m, while discouraged work-seekers dropped by 26 000 to 3.2m.
The expanded definition of unemployment, which includes those discouraged from seeking work, eased to 41.2% from 42.1% in the second quarter.
The youth unemployment rate, measuring job-seekers between 15 and 24 years old, dropped to an over one-year low of 58%.
“The youth remain vulnerable in the labour market however, the third quarter of 2023 results show that the total number of unemployed youth (15–34 years) decreased by 174 000 to 4.6m while there was an increase of 237 000 in the number of employed youth to 6.0 million,” Maluleke said.
“This resulted in a decrease in the youth unemployment rate by 1.9 percentage points from 45.3% in the second quarter to 43.4% in the third quarter.”
Analysts pointed out that job creation will now be driven by current and expected economic conditions, but power supply remains vulnerable to potential shocks and mishaps.
Oxford Economics Africa head of macro Jacques Nel said although total employment had risen to the highest level since before the Covid-19 pandemic, the unemployment rate remained far too high and has not declined sufficiently from the pandemic peak of 35.3%, which was reached in the fourth quarter of 2021.
“Job losses in manufacturing and mining point to a weak economic environment, while the financial sector managed to employ more people in the third quarter,” Nel said.
Economists also said rail and port bottlenecks had worsened, weighing on domestic trade, mining and manufacturing, while private firms were increasingly forced to operate in failing municipalities.
Nedbank economist Johannes Khosa said the gradual moderation in the unemployment rate despite the challenging economic environment was encouraging.
However, Khosa said the outlook remained uncertain given the adverse economic landscape.
“So far, much of the employment recovery has been driven by normalisation in underlying economic activity in those industries heavily affected by the restrictions imposed during the pandemic,” Khosa said.
“The largest cost component for most companies is their labour force. This vicious spiral is already playing out in mining and manufacturing – the two sectors most exposed to the country’s infrastructural constraints.”