Fourth quarter springs a positive surprise on jobs front
The unemployment rate improved more than expected, but the economy's ability to absorb work-seekers deteriorated
SA’s unemployment rate improved in the fourth quarter from the third, as might be expected for a quarter that usually brings a temporary hiring boost thanks to the holiday season.
Unemployment from September to December was estimated at 26.7%, Statistics SA said in its quarterly labour force survey on Tuesday.
That is a whole percentage point better than the 27.7% seen in the July-September quarter and compares with Investec’s forecast of an improvement to 27%. Unemployment in the fourth quarter of 2016 was 26.5%.
Investec’s Kamilla Kaplan said in her preview last week that a fourth-quarter rate of 27% would put unemployment for all of 2017 at 27.5%, up from 26.7% for all of 2016.
This is how unemployment rates in the fourth quarters of the past decade stack up:
Unemployment rose to 27.7% in the first quarter of the year — its highest level since 2003, and worse than the rates of 23%-24% seen in the 2008-09 financial crisis — and stayed at that level for most of the year.
Trading Economics and FNB had both expected unemployment to remain at 27.7%.
The absorption rate deteriorated in the fourth quarter compared with the third, to 43.1% from 43.3% — and lower than the 43.5% seen a year earlier.
The absorption rate is the ratio of employment to population, and measures the ability of the economy to provide work for job seekers. Unlike the unemployment rate, an increase in the absorption rate is a positive sign.
The number of unemployed people fell to 5.88-million, from 6.21-million in the third quarter, and compared with 5.78-million in the final quarter of 2016.
The key stats from Stats SA:
As these numbers show, although the number of employed people dropped in the fourth quarter from the third, a shrinking labour force meant the unemployment rate — which is the proportion of the labour force that is unemployed — also shrank.
To give a broader perspective, the labour force (measured at 2.051-million people in the fourth quarter) is a little more than half the size of the working-age population of 37.217-million people.
The number of discouraged work seekers increased by roughly 92,000 to 2.528-million from 2.436-million in the third quarter.
The formal, nonfarm sector employed fewer people in the fourth quarter compared with the third, at 11.244-million against 11.379-million, but showed an improvement from 11.156-million a year earlier.
Looking at various economic sectors' performance during the quarter, jobs were lost in the following sectors:
• Finance and other business services: 92,000
• Mining: 39,000
• Trade: 25,000
• Transport: 5,000
• Utilities: 4,000
Manufacturing added 13,000 job, the highest number added. Construction, and community and social services, added 7,000 jobs each.
Recent signals from the manufacturing sector have been mixed.
Manufacturing production grew 2% in December, an acceleration from November’s 1.7%.
But the most recent Absa’s purchasing managers index (PMI) for the sector fell further into contraction territory, pointing to a more pessimistic outlook for the sector.