(AP Photo/Frank Augstein)

JOHANNESBURG - The manufacturing industry turned out to be the biggest loser of jobs according to quarterly employment statistics released by Statistics SA on Thursday, which showed that

South Africa’s employment decreased by 34 000 to 9.617 million in the three months to June.

The industry’s 1.1 % quarterly decrease in June compared with March was attributed to decreases in employment in the food, beverages and tobacco; textiles, clothing and leather; basic metals, fabricated metal products, machinery and equipment and office; accounting and computing machinery. 

However, on a year-on-year basis, the industry recorded a 0.2% increase compared with June last year, according to the report released by statistician-general Pali Lehohla. 

Gerrit van Rooyen, economist at NKC African Economics, said the drop in jobs and average real earnings reflected stagnant economic growth and depressed business sentiment.

The large decline in manufacturing jobs was despite the sector exiting a three-quarter recession by accelerating 1.5% quarter-on-quarter in this year’s second quarter. 

“Manufacturing remains hampered by low domestic demand, low confidence levels and economic strain in some of South Africa’s export destinations. However, improved economic growth in the mining… and trade… sector in (the second quarter), supported higher employment in these sectors during the same quarter,” said Van Rooyen. 

“Nevertheless, due to meagre economic growth – we forecast gross domestic product growth of only 0.7% for 2017 – the persistence of large skills shortages and a lack of employment-stimulating policies, the outlook for employment is very bleak over the near and medium term.” 

He said economic stagnation and policy paralysis were impeding the creation of sufficient employment opportunities to absorb new entrants into the labour market and, therefore, contribute to continued high levels of unemployment and income inequality.

Other industries cited were construction with a 1.8% decline, community services with a 0.4%, transport with a 1.1% decline and business services with a 0.05% decline.

However, on an annualised basis employment increased by 0.1%. The increases were in mining, which scored a 0.6% quarterly increase in June 2017 compared with March 2017 a 2% annual increase in June 2017 compared with June 2016. 

Ian Cruickshanks, the chief economist at the SA Institute of Race Relations, described these statistics as “worrying indeed”. He said while there was some year-on-year growth, what was particularly of concern was the quarter-on-quarter decline.

“Jobs mean retail spending and fewer jobs mean fewer people spending,” said Cruickshanks. “This has a negative impact on the economy… the economy is in trouble.”

He attributed the job losses mainly to low business confidence in the country. “This clearly illustrates the low-growth situation we have and if this continues we could even end up with no growth,” he said.

Wholesale and retail trade recorded a 0.1% quarterly increase in the three months to June compared with the previous quarter and a 2.3% annual increase in the 12 months June compared with last year.

The country’s employment rate decreased to 43.3% in the second quarter from 43.74% in the first quarter of this year, according to macroeconomics website Trading

Economics. It said the employment averaged 43.21% from 2000 until 2017, reaching an all-time high of 46.17% in the fourth quarter of 2008 and a record low of 41% in the first quarter of 2004.

Stats SA also reported that gross earnings paid to employees showed a 0.4% decline in the quarter to June and this was attributed to decreases in business services industries. However, year-on-year, gross earnings recorded a 6% increase.

-BUSINESS REPORT