South Africa’s unemployment rate for the second quarter plummeted to its lowest point since the initial quarter of 2021, defying analysts’ predictions. The latest data from Statistics South Africa revealed a significant decline as sectors like construction and trade fueled job creation, surpassing market expectations.
According to the official report released on Tuesday in Pretoria, the jobless rate declined to 32.6% during the three months leading up to June, down from 32.9% recorded in the previous quarter. This positive trend defied projections by economists in a Bloomberg survey, who had foreseen a more modest decrease to 32.8%.
However, while these statistics present a hopeful picture, a closer examination reveals a more complex reality. Accounting for the expanded definition of unemployment, which includes those available for work but not actively seeking employment, the rate stands at 42.1%. This figure is down from the March quarter’s 42.4%, showcasing a slight improvement.
Also, South Africa’s economy is projected to stagnate this year, largely attributed to severe power shortages, diminished commodity prices, and logistical bottlenecks. The nation is grappling with a distressing series of power cuts, surpassing those experienced in all of 2022.
Eskom Holdings SOC Ltd., the state utility responsible for power supply, is grappling with the incapacity to meet the escalating demand due to aging and under-maintained plants.
As a consequence of these adverse conditions, the central bank’s growth projection for the year has been revised to a meager 0.4%, significantly lower than the anticipated 2% growth without the hindrance of power rationing.
While certain sectors have demonstrated remarkable progress, such as the construction and trade industries that have seen a surge in job opportunities, others have not fared as well. Manufacturing and finance have encountered setbacks in employment growth.
The combination of ongoing power outages and logistical inefficiencies within the freight rail network and ports has caused a substantial increase in business operating costs. Notably, major corporations like Shoprite Holdings Ltd., the largest grocery chain in South Africa, have been forced to allocate a substantial budget of 1.3 billion rand ($68 million) toward diesel-generated power throughout the financial year ending in July.