JOHANNESBURG- Economists believe this week’s unemployment data will remain stubbornly high amidst weak economic growth. The third quarter jobs data will be released tomorrow after the two previous quarter’s data came in weak with the last print showing unemployment at above 27 percent.
Lara Hodes, an economist at Investec, said weak economic growth, elevated unemployment levels and falling real disposable incomes have subdued local demand.
“Unemployment readings for the third quarter of 2018 are likely to remain stubbornly high, given the weak economic growth backdrop, with little change expected from the 27.2 percent unemployment rate outcome of second quarter,” Hodes said.
“A notable uptick in investment, which would ultimately lift business confidence and potential gross domestic product (GDP) growth, is required to enhance employment rates”.
The hopes of more than 9 million South African’s who are job hunting were further dented last week after the Treasury slashed this year’s growth projection to 0.7 percent from 1.5 percent. The Treasury joined the SA Reserve Bank, which also pegged 2018 growth at 0.7 percent.
FNB chief economist Mamello Matikinca said unemployment would remain high. “We don’t anticipate much improvement in the unemployment rate, given depressed business conditions. We are also not forecasting a material deterioration, and expect the number (27.2 percent) to remain more or less stable,” Matikinca said.
Earlier this month, Bureau for Economic Research data showed that since the 2008 financial crisis, domestic real GDP growth had underperformed relative to both emerging market peers and average global growth.
The research showed that, under different assumptions regarding post-crisis growth and the elasticity of employment, the economy could have created between 500 000 and 2.5 million more job opportunities over the eight-year period.
This week will also see a raft of other economic activity data that will provide more insight into the state of the economy.
Today will see the release of September’s Private Sector Credit Extension with analysts expecting a mild deceleration after the large corporate credit growth numbers of August.
Wednesday will see the South African Revenue Services publish the September trade balance.
Thursday will round off the week with the release of the Absa manufacturing Purchasing Managers Index, while October vehicle sales will also be released.