Picture: THE TIMES
Picture: THE TIMES

The unemployment rate has accelerated to 27.5% in the third quarter from 27.2% in the second quarter of 2018, according to the quarterly labour force survey released on Tuesday.

This is marginally higher than the forecast 27.4% for third quarter.

The jobless rate has climbed steadily since the second quarter of 2018 after the rate rose to 26.7% in the first quarter. The economy then slipped into a recession in the second quarter.

There are now 16.4-million employed people and 6.2-million unemployed.

The number of unemployed declined in seven out of 10 industries.

The industries that recorded larger declines in employment were private households, mining and manufacturing.

The declines were offset by employment gains in finance and other business services, which created 102,000 new jobs, and trade and construction.

Employment gains were recorded in seven of the nine provinces, with Limpopo, Gauteng and Mpumalanga leading. The Free State and Eastern Cape were the only provinces recording employment losses.

The expanded unemployment rate, which includes discouraged work seekers, rose by 0.1 of a percentage point to 37.3%. In the second quarter the rate was 37.2%.

Over the period in review, the number of discouraged work seekers decreased by 131,000 while the working age population grew by 153,000 people, or 0.4%, in the third quarter compared with the previous quarter.  

The youth unemployment rate in the 15-24 age group declined 0.8% to 52.8%, quarter on quarter. 

The informal sector recorded employment gains of 188,000. 

Statistician-general Risenga Maluleke said: “Regardless of the level of education, young people aged 15-24 years remain vulnerable.”

The unemployment rate has moderated from a historic high of 27.7% in 2017, although it remains stubbornly high. Weak growth, a slew of negative credit ratings and political uncertainty caused it to rise in 2017.

Ahead of the survey announcement, Investec forecast that the unemployment rate would rise to 27.4%.

Investec economist Lara Hodes said: “A notable uptick in investment, which would ultimately lift business confidence and potential GDP growth is required to enhance employment rates.”

The national treasury and Reserve Bank forecast GDP growth of 0.7% for 2018 against the International Monetary Fund’s (IMF) downward revised expectation of 0.8%.

FNB chief economist Mamello Matikinca forecast little change in the unemployment rate “given depressed business conditions”.

Higher rates of unemployment have constrained the willingness of consumers and their ability to spend. This was reflected in still weak private sector credit extension data for September that was published on Monday.

Consumption accounts for two-thirds of GDP. The debt to disposable income rate for households also remained elevated in to September. 

“A credit-fuelled recovery in consumption expenditure is not expected and, as such, any significant demand-led inflationary pressures should remain absent,’’ Hodes said. 

SpeckmanA@businesslive.co.za

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