South Africa’s unemployment rate, the highest of 62 countries tracked by Bloomberg, was little changed in the second quarter as the economy failed to create jobs, undermining the strength of the recovery.
The jobless rate increased to 25.3 percent from 25.2 percent in the first quarter, Statistics South Africa said in a report released in Pretoria today. The number of people with work fell by 61,000 to 12.7 million.
Rising job losses may curb consumer spending, which accounts for two-thirds of demand in the economy, just as the recovery begins to stall. Growth in Africa’s biggest economy probably slowed in the second quarter after expanding an annualized 4.6 percent in the previous three months, Finance Minister Pravin Gordhan and Reserve Bank Governor Gill Marcus said this month.
“The fall in employment is disappointing, but not completely unexpected as confidence remains weak and both the local and global recoveries remain fragile,” Johannes Khosa, an economist at Johannesburg-based Nedbank Group Ltd., said in a note to clients. “Modest gains are possible later in the year.”
The biggest decline in employment during the second quarter was recorded in the manufacturing industry, which shed 53,000 workers, the agency said, as the debt crisis in Europe, consumer of about a third of South Africa’s exports, curbed demand.
Agriculture lost 32,000 jobs while employment in the construction industry fell by 15,000, the agency said. Mining companies added 9,000 workers in the quarter.
“The unemployment rate remained virtually unchanged, but the rate of job losses seemed to have slowed down,” Yandiswa Mpetsheni, executive manager of labor statistics at the agency, told reporters in Pretoria today. “The economy is not yet creating jobs.”
Job losses totaled 870,000 last year as the economy fell into its first recession in 17 years, undermining President Jacob Zuma’s pledge to cut the unemployment rate to 14 percent by 2014. The Reserve Bank has cut its benchmark interest rate seven times to 6.5 percent since December 2008 to help offset the impact of declining employment.
More than 60 percent of those who are unemployed have been without jobs for more than a year, Mpetsheni said. The expanded unemployment rate, which includes those people that have given up looking for work, increased to 35.9 percent last quarter from 35.4 percent in the previous three months.