South Africa Unemployment Rate Drops to More Than 2-Year Low

Feb. 7 (Bloomberg) -- South Africa’s unemployment rate declined to 23.9 percent in the fourth quarter, the lowest level since June 2009, adding to the recovery in Africa’s biggest economy.

The jobless rate fell from 25 percent in the previous three months, Statistics South Africa said in a report released today in Pretoria, the capital. South Africa has the highest unemployment rate of 61 nations tracked by Bloomberg.

The number of people working rose 179,000 to 13.5 million as factories and retailers added jobs, the agency said. A boost in manufacturing, the second-biggest industry, may help support the economy, which grew at its slowest pace in about two years in the third quarter.

“This a natural recovery from the big slump in 2009, 2010,” Dennis Dykes, chief economist at Johannesburg-based Nedbank Group Ltd., said by phone. “We still have a ways to go to catch up.”

The median estimate of six analysts in a Bloomberg survey was for the jobless rate to drop to 24.8 percent.

The economy grew an annualized 1.4 percent in the third quarter as manufacturing and mining contracted, threatening the government’s goal to create 5 million jobs by 2020. Gross domestic product needs to expand 7 percent a year for the next 10 years to cut the jobless rate to a target of 14 percent, according to Finance Minister Pravin Gordhan.

Growth Forecasts

The International Monetary Fund cut its estimate for economic expansion this year to 2.5 percent from 3.6 percent. The economy may grow by less than 3 percent in 2012, Finance Minister Pravin Gordhan said on Jan. 26, lower than a previous estimate of 3.4 percent. The statistics agency is scheduled to release fourth-quarter economic growth data on Feb. 28.

The number of unemployed people fell by 198,000 to 4.24 million in the fourth quarter from the previous three months, Statistics South Africa said. Compared with a year earlier, 107,000 more people are unemployed, it said.

“We do see a glimpse of hope,” Kefiloe Masiteng, deputy director-general at Statistics South Africa, told reporters in Pretoria today.

Factories added 52,000 jobs in the fourth quarter, while mining created 3,000 jobs, the agency said. The wholesale and retail industry employed 48,000 more people compared with the third quarter as the lowest interest rates in 30 years helped boost consumer spending.

South Africa’s central bank left its benchmark rate at 5.5 percent on Jan. 18 even as inflation stayed outside its 3 percent to 6 percent target band for a second month in December.

The rand was little changed at 7.5532 against the dollar as of 12:05 p.m. in Johannesburg, while the yield on the benchmark government bond due in 2015 dropped 2 basis points to 6.49 percent.

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