While South Africa’s latest unemployment data has been welcomed after reaching record highs at the start of 2022, the outlook for the job market remains uncertain, says Nedbank.
In a research note on Wednesday (1 June), the bank noted that the economy had started the year positively, with corporate profitability recovering. However, the recovery is now threatened by concerns about global stagflation – including the dilemma of high-interest rates, slow economic growth, and high unemployment.
“Conditions in the sectors that supply the export market are likely to remain subdued as global demand will be restrained by the slowdown in China’s economic growth, the impact of the Russia-Ukraine war, and tighter monetary policy. The sectors focused on local demand are still expected to expand, mainly supported by consumer spending, but the upside will be limited by rising inflation and interest rates.
“This, together with slow structural and policy reforms and power shortages, will weigh on business confidence and the private sector’s willingness to expand capacity, essential for job creation. At the same time, some of the businesses affected by the flood in KZN will take time to return to full operations due to the extent of the structural damages.”
However, the termination of the state of emergency earlier in the year should support the recovery of labour-intensive industries such as hospitality and tourism, the bank said.
“Public sector employment will be restricted by government caps to support necessary fiscal consolidation. The labour market will continue to expand due to new entrants into the labour market and the return of discouraged work-seekers, while employment growth will probably increase at an only moderate pace. As a result, the unemployment rate will remain structurally high in the short term. ”
Statistics South Africa’s latest data, published on Tuesday (31 May) shows a decline in the unemployment rate from a record high of 35.3% in…