Unemployment data put jobs in spotlight
bdlive.co.za - Oct 30th 2014, 08:59
Jobs — or rather the lack of them — will come into focus on Thursday when Statistics SA releases unemployment data for the third quarter.
Unemployment was at 25.5%, or just more than 5-million, in the second quarter. Figures are due to show millions who actively looked for jobs could not find any. Worryingly, data also show the public sector is the main driver of employment, with the private sector creating jobs only marginally.
The government faces the challenge of keeping spending under control. This means its job-creating abilities will be limited — despite the better than expected performance — leaving this responsibility to the private sector.
However, it is encouraging that despite many complaints from the ranks of the private sector about stringent labour laws, it is utilising some of the incentive schemes provided by the government.
The Jobs Fund is reported to have approved 93 projects and allocated R5bn in grant funding, with total employment from these projects of 167,847. The fund is also set to help more than 185,000 people receive work-related training.
Last week, it was revealed that the employment tax incentive implemented at the beginning of the year to incentivise companies to employ young people, has helped place 209,000 youth in employment within 23,500 businesses.
The result of SA’s high unemployment rate is that not as many people are spending in the economy as are required to drive economic activity. This is why credit extended to households is likely to grow in the coming months until the economy grows faster and confidence levels rises among employers.
On Wednesday, the Reserve Bank will release the credit extension data for last month. This will be followed by Statistics SA’s producer inflation data for last month on Thursday. The figures are likely to show that inflation pressures at the producer level are easing, particularly due to lower global food and oil prices. The latter have helped ease the pressure on motorists through fuel price decreases. Producer inflation was recorded at 7.2% in August from 8% in July.
A BDlive median consensus forecast from a survey of six economists was for producer inflation to have moderated to 6.9% year on year in September.
The South African Revenue Service will release the trade balance data for last month on Friday. Data will show that SA recorded another deficit following a staggering R16.3bn shortfall in August as the country continues to import more than it exports.
However, the latest deficit figures could come in lower than August’s shortfall given that industries affected by strikes have returned to full production.
Exports are not expected to grow as strongly as initially thought in view of the projections for modest global economic growth and demand.
Of particular concern is the fact that economic growth is slowing in China and India, countries which together account for most of SA’s mineral exports. While growth in Japan and the eurozone is expected to come under pressure, the US — the world’s biggest economy — is forecast to improve. This will at least sustain demand for some of SA’s exports.
However, economists at Capital Economics think that although the US economy has emerged as a "bright spot" in an uneven global recovery, its imports from emerging market economies have not picked up to anywhere near as much as would have been expected by historical standards.From DFM Publishers (Pty) Ltd
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