‘Glimmer of hope’ as jobless rate hits new low

‘Glimmer of hope’ as jobless rate hits new low

FMCG SUPPLIER NEWS

Business Day - Feb 8th, 09:37

SA’s unemployment rate fell to its lowest level in more than two years in the final quarter of last year, with manufacturing playing a key role in job creation, official data showed yesterday. 

The jobless rate fell to 23,9% from 25% in the third quarter, Statistics SA said. Employment rose by a net 365000 over the whole of last year, following declines in both 2010 and 2009.

The figures suggest that growth in the economy accelerated during the fourth quarter of last year. They also mark the second consecutive quarter of significant gains in employment, which could signal the start of a trend.

"We do see a glimmer of hope," Kafiloe Masiteng, deputy director-general of population and social statistics at Statistics SA, said yesterday.

During the fourth quarter the formal sector of the economy created 180000 jobs, overshadowing a 26000 decline in employment in the informal sector.

The growth was led by community and social services (66000 new jobs), manufacturing (52000) and trade (48000).

Jobs were also created in the agricultural sector and private households. There were declines in employment in the financial services and construction sectors.

The increase in jobs in retail and wholesale trade was no surprise as there is normally a spike in temporary employment in that sector during the fourth quarter, when consumers ramp up their year-end spending.

But the rise in manufacturing employment implies that the economy’s second-biggest sector may have grown during the fourth quarter, after shrinking for two quarters in a row.

Coenraad Bezuidenhout, executive director of the Manufacturing Circle, said he expected the increase to be short-lived.

The sector was supported by the weaker rand in the fourth quarter, which boosted the competitiveness of local exports.

Since then the rand has strengthened and "anecdotal evidence" suggested there was another contraction in factory production in the first quarter of this year, Mr Bezuidenhout said.

Closer examination of the Statistics SA data is not as encouraging as the headline numbers. It shows that the number of people classified as unemployed rose to 4,24-million in the fourth quarter of last year from 4,14-million in the final quarter of 2010.

This shows that the number of entrants to the job market is surpassing the pace of job creation.

The number of discouraged work-seekers who have stopped looking for jobs rose by 111000 during the fourth quarter.

Nonetheless, the expanded definition of unemployment, which includes this group, dipped to 35,4% from 36% in the third quarter of the year.

Overall, the pace of job creation remains far too slow to meet the government’s stated goal of generating 5-million new jobs by 2020.

The government has established a R9bn jobs fund and the Industrial Development Corporation is putting aside R10bn for investment in labour-intensive projects to be spent over the next five years.

Analysts say that these measures will help but the fragile nature of SA’s economic recovery may not support robust job creation this year.

"Challenging economic conditions, both locally and globally, are expected to persist in 2012, which could weigh on business confidence and discourage organisations from expanding production capacity," Nedbank economist Johannes Khosa said yesterday.