SA’s jobless rate rises to 27.6%, near 15-year high

South Africa’s unemployment rate climbed in the first quarter of 2019 as construction and financial-services firms cut positions.

The unemployment rate rose to 27.6% from 27.1% in the three months through December, Statistics South Africa said in report released Tuesday in the capital, Pretoria. The median estimate of six economists surveyed by Bloomberg was 27.4%.

Key insights

The jobless rate in Africa’s most-industrialised economy hasn’t fallen below 20% since at least 2000, largely due to sluggish economic growth. Gross domestic product hasn’t expanded by more than 2% a year since 2013 and economists say GDP must rise by 3% to 5% annually for the unemployment rate to recede.

President Cyril Ramaphosa’s appetite to impose tough economic reforms will be tested in the coming weeks as he streamlines his cabinet and appoints ministers to key departments. Ramaphosa, who led the ruling African National Congress to a sixth straight election victory at the weekend, pledged growth of as much as 5% a year in his campaign for leadership of the party.
“At this stage, there is too much slack in the labour market and this will remain the status quo until structural reform takes hold,” Mamello Matikinca, the chief economist at FirstRand’s First National Bank unit, said before the release.
The unemployment rate usually increases in the first quarter as temporary positions filled over the festive season are cut, Kamilla Kaplan, an economist at Investec Bank, said in a note before the data’s release. All sectors barring manufacturing, trade and transport cut employment. At 142 000, the construction industry cut the most jobs while financial services trimmed 94 000 positions.
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