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Chief Investment Officer comments on SA unemployment rate

02 December 2021 Adriaan Pask, Chief Investment Officer at PSG Wealth

Assessment:

• The increase in unemployment was in line with our expectations, given the current tough economic backdrop.
• It is evident that despite the rollout of Covid-19 vaccinations, normality is still elusive. While we have seen some green shoots in economic data, like climbing PMI numbers, economic recovery is sluggish and uneven around the globe.
• However, we believe momentum in economic growth will start to follow and risks should start to decline after a complete rollout of vaccination programmes which are expected to continue into the first half of 2022.

The Event

• South Africa's unemployment rate rose to 34.90% in the third quarter of 2021, up from 34.40% in quarter two.
• This is the highest jobless rate since comparable data began in 2008, on the back of the July unrests and stringent lockdown measures.
• The number of unemployed persons fell by 183 thousand to 7.6 million, but employment slumped by 660 thousand to 14.2 million and the labour force plunged by 842 thousand to 21.9 million.
• Job losses were concentrated in the trade sector (-309 thousand), community and social services (-210 thousand), construction (-65 thousand), private households (-65 thousand) and mining (-54 thousand), while the finance sector posted the only increase (+138 thousand).
• The expanded definition of unemployment, including people who have stopped looking for work, was at 46.6%, up from 44.4% in the second quarter.
• The youth unemployment rate, measuring jobseekers between 15 and 24 years old, hit a new record high of 66.5%

The impact

The rand weakened slightly following the announcement, trading at R16.14/$, R21.56/£ and R18.34/€ at 12h23 on 30 November 2021, and the FTSE/JSE All Share Index traded flat at 0.09%.

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