South African unemployment rate hits 14 year high

South Africa’s jobless rate rose in the three months through March as employment in farming and trade fell.

The unemployment rate increased to 27.7 percent in the first quarter of 2017 from 26.5 percent in the previous three months, Statistics South Africa said in a report released on Thursday in the capital, Pretoria. That’s the highest rates since 2003, according to data from the International Monetary Fund. The number of people without jobs rose 433,000 to 6.2 million. The median of five economist estimates compiled by Bloomberg was for unemployment to increase to 27 percent.

Africa’s most-industrialized economy expanded at 0.3 percent in 2016, the slowest pace since a 2009 recession, due to a drought, low commodity prices and weak demand from its main export markets. That has complicated the task of the government to create jobs.

Unemployment levels will continue to be stubbornly high because of the weak economic growth outlook,” Kamilla Kaplan, an economist at Investec Ltd. in Johannesburg, said before the release of the data.

Agriculture jobs declined by 44,000 and employment in trade by 15,000, the statistics office said. The manufacturing industry employed 62,000 more people in the first quarter than in the preceding three months.

The central bank forecasts gross domestic product expansion of 1 percent this year and 1.5 percent in 2018. The pace of recovery this year and in 2018 is unlikely to prevent a further increase in unemployment, the International Monetary Fund said last month.

Fitch Ratings Ltd and S&P Global Ratings both cut their assessments of the nation’s foreign-currency debt to junk in April following a cabinet reshuffle in which Pravin Gordhan was replaced as finance minister. The companies cited fears about polity uncertainty and slow economic growth in their announcements.

The rand strengthened 0.6 percent to 13.0379 per dollar as of 12:38 p.m. in Johannesburg. Yields on rand-denominated government bonds due December 2016 fell 5 basis points to 8.55 percent.

 

Mazino.D/Bloomberg