The economy shed 75,000 jobs in the first quarter of the year, according to figures released by Statistics SA

This was despite growth in the agricultural sector, which gained 26,000 jobs, and in private households, which created a 33,000 jobs in the first quarter of 2012, according to the quarterly labour force survey. However, the number of job losses were still down on the last quarter of 2011, when the formal sector shed 107,000 jobs.

According to the survey, 28,000 jobs were lost in the informal sector in the first quarter of 2012.

StatsSA said an additional 207,000 people were participating in the labour market since last year. They included new market entrants.

The labour force participation rate had increased to 54.7 percent.

The survey found that the unemployment rate had increased by 1.3 percentage points to 25.2%, as a result of the increased labour force, and a decline in employment.

Construction and manufacturing had declined by 6.7% and 3.7% from the last quarter.

Compared to the same period last year, employment increased by 290,000 jobs, a 3.1% increase.

The growth in employment was driven by trade (127,000 jobs), community and social services (121,000) and finance (102,000).

At the start of the year, unemployment usually shows an increase.

The survey found that around 4.5 million people were unemployed in the first quarter, an increase of 282,000 people.

Of these, 3.1 million (67.8 percent) had been looking for work for at least a year.

A total of 59.6% did not have Matric and 44% had not worked before.

ANALYSTS COMMENTS  

PETER ATTARD MONTALTO, EMERGING MARKET ECONOMIST, NOMURA  

“Unemployment made a surprisingly large leap in Q1 ... Most of this was due to the fact the labour market cannot absorb new entrants fast enough in the current environment with unemployment rising by 282,000 compared with employment’s fall of ‘only’ 75,000.  

“This fall in employment removed only about 40% of those jobs created in Q4. However it shows a much faster turnaround in the labour market than we had expected. Despite strong manufacturing and retail during the quarter it seems (global) risk aversion and higher cost inflation (energy and other costs including unit labour costs) are having a toll — beyond what the PMI (purchasing managers’ index) might have suggested.  

“There was particular weakness in construction despite the ongoing push on infrastructure showing these is yet to really be any significant impact from the government’s expenditure in this area on unemployment yet, with manufacturing too being particularly weak. Whilst we must wait to see if the trend is continued in Q2, we do think today is likely to be an earlier start to the turnaround in the labour market we already forecast to happen this year from late Q2.

“Today’s numbers play into our more bearish view on growth this year and that a sharper slowdown in retail will be on the way as aggregate disposable income drops.  

“This also reinforces our view of rates being on hold for longer than consensus and the chances of cuts as a (non-baseline) tail risk still very much being there.”  

RAZIA KHAN, HEAD OF RESEARCH AFRICA, STANDARD CHARTERED  

“Disappointing labour market data overall. Not only did the unemployment rate tick higher at a time when the economy was thought to be on a recovery path , but the economy appears to have shed jobs even in sectors that are likely to have shown decent growth in Q1.  

“The loss of a significant number of construction jobs in Q1 will come as an especial blow, despite the known seasonality of this sector. The suggestion is that the ramping up of public sector investment seen so far is not yet sufficient to impact on job creation in an overwhelmingly positive way.  

“Should growth slip because of external shocks, the impact on unemployment from already uncomfortably high levels will be even more pronounced.  

“The authorities are likely to do what they can over the medium term, creating the fiscal space for scaled up infrastructure spending and hoped-for job creation.  

“But doubts about whether this will happen soon enough to impact on aggregate growth numbers this year will persist. For monetary policy, the extent to which the rise in unemployment constrains a picture of otherwise-steady recovery in domestic demand will be key to the SARB’s (South African Reserve Bank) intent to embark on a normalisation cycle at some point.”  

JOHANNES KHOSA, ECONOMIST, NEDBANK  

“Overall it is a very bad number, it is an indication that things are still tough out there.  

“We don’t expect that number to improve during the course of the year given that the number of discouraged workers will remain high. We don’t expect job creation to increase during the course of the year with weaker economic conditions both locally and globally.”  

KEVIN LINGS, CHIEF ECONOMIST, STANLIB  

“Part of the problem was that the data is not seasonally adjusted so there was an improvement towards the end of last year but into the beginning of this year it just has not continued on.

“We are just not getting any momentum in terms of job creation.  

“We have seen some improvement in employment relative to the end of the recession, but we have got a long way to regain a lot of jobs that we lost in the recession, we do not seem to be gaining momentum, if anything we have lost a little bit.”  

BACKGROUND  

— Out of nearly 50 million people in South Africa, only about 13,1 million are employed.  

— The government is proposing changes to labour law that are intended to increase job security for temporary workers but economists say this will worsen unemployment as it ramps up costs for employers.   

— Finance Minister Pravin Gordhan has said the economy needs to grow by 7% a year on a sustained basis to make a dent on unemployment, more than double the current rate of 2,7% seen for 2012.  

— The government has huge infrastructure development plans which it says will decrease the level of joblessness in Africa’s biggest economy.