ECONOMIC WEEK AHEAD: SA unemployment rate again in the spotlight

Stats SA will release second-quarter employment data on Tuesday.

The unemployment rate rose 0.8% to 32.9% in the first three months of the year as tens of thousands of jobs created in sectors such as manufacturing, agriculture and mining failed to offset losses in finance, construction and community & social services, which includes government services, education and social work.

The unemployment level surged by 330,454, reaching more than 8.2-million due to a significant influx of new entrants into the labour market.

Under the expanded definition of the unemployment rate, which counts not only those seeking work but those too discouraged to look for a job, there was an increase of 0.8 percentage points to 41.9% in the first quarter.

On Tuesday, Stats SA will also publish data on mining production for June. In May, mining production was flat compared with May 2023. On a seasonally adjusted basis, output fell by 0.6% month on month, partially offsetting the 0.8% increase recorded in April.

“Over the three months to May, mining output declined by nearly 1%, indicating that the sector may have continued to weigh on growth in the second quarter of 2024. The upcoming June data will be crucial in providing a complete picture of the mining sector’s contribution to GDP growth in the second quarter,” said FNB chief economist, Mamello Matikinca-Ngwenya.

Retail sales data for June will be published on Wednesday. In May, the volume of sales recorded came in slightly higher than expected, growing 0.8% year on year compared with 0.7% in April.

Six out seven categories recorded growth, spearheaded by spending at general dealers, food and beverage stores, and furniture shops. Seasonally adjusted sales declined 0.7% compared with the previous month, partly reversing the 1.3% gain in April.

Nevertheless, from May the retail industry was still contributing positively to the economy in the second quarter of 2024.

Stats SA data showed that purchases from retailers increased by 0.6% for the three months to end-May when compared with the previous three months. This largely resulted from a 2.9% increase in sales by general dealers such as supermarkets. April and May were the first months to see a prolonged halt in load-shedding after more than 18 months of severe power disruptions.

The more than four-month-long suspension of load-shedding has positively influenced companies’ ability to pay better salary increases in 2024. This has started to bring some relief for household budgets in SA, which have been under “immense pressure” from rising inflation and high interest rates over the past two years, said BankservAfrica in its May take-home pay index.

However, consumer spending should remain relatively subdued given the persistently high costs of living and low consumer sentiment, Matikinca-Ngwenya said.

erasmusd@businesslive.co.za