SA’s sky-high unemployment rate moderated to 27.1% between the two final quarters of 2018, thanks mainly to a surge in formal sector employment over the festive season.

However, the outcome is still worse than a year ago when the unemployment rate was 26.7% and, given the weak trends in investment and growth, joblessness is likely to keep rising.

Released this week, Stats SA’s "Quarterly Labour Force Survey" (QLFS) for the fourth quarter of 2018 exceeded many economists’ expectations — that the unemployment rate would remain flat at 27.5% on a quarterly basis.

Instead, the economy created 149,000 jobs quarter on quarter in the fourth quarter. Of these, 92,000 were created by the formal sector, following two consecutive quarters of contraction. These gains were driven mainly by finance and business services (173,000 jobs), mining (32,000) and manufacturing (29,000). Formal sector employment in all other industries declined, with community and social services (a proxy for government) recording the largest decline, 39,000 jobs, while the construction and transport sectors lost 21,000 each.

However, because the QLFS is not seasonally adjusted, it’s best to look at annual changes in employment. Viewed this way, the latest numbers are dire. Though the economy created 358,000 new jobs over the past year, 259,000 more people also became unemployed and roughly 300,000 more people became too disillusioned to look for work.

The pool of discouraged jobseekers has increased by almost 12% over the past year, lifting SA’s expanded unemployment rate from 36.3% to 37%. Before the global financial crisis, it was just under 30%.

The largest increase in the expanded unemployment rate was in the North West (up 2.3 percentage points to 42.9%), followed by Limpopo and the Eastern Cape (up two percentage points each to 38.8% and 46.8%, respectively).

Equally frightening is that the percentage of people aged 15-24 who are not in employment, education or training has climbed over the past year from 29.7% to 31.1%.

"The numbers do little to show that the economy is making significant headway in meaningfully absorbing the growing labour force," says BNP Paribas economist Jeffrey Schultz.

"This is unlikely to be solved until the economy registers positive per capita GDP growth and drastically improves policy certainty and labour productivity."