Third-quarter unemployment numbers will headline the local data card today, with a drop in the official jobless rate from 33.5% to 32.8% expected. Still, South Africa’s labour market remains extremely loose, which is a clear indictment of the structural headwinds that years of poor governance have created. Optimistically, some policy reform under the GNU could lead to increased labour demand, but most businesses will likely adopt a wait-and-see approach to hiring. In the interim, with economic growth forecasts of 1%-2% per annum, the labour market will likely remain loose. Various studies have suggested that any growth rate below 3% will not reduce unemployment materially, given the rapid growth of school leavers into the labour market.
Additionally, manufacturing production stats for September are also scheduled for publication today. Recall that manufacturing output contracted -1.2% y/y in August, from growth of 1.6% y/y in July, as nearly all major production categories worsened through the month. Key amongst these was vehicle production, which has fallen sharply through 2024 as export demand slows, and production levels are now below where they were in 2020. This is a disappointing outcome for an industry often held up as an example of state-sponsored industrial success. Looking ahead, Bloomberg consensus estimates expect manufacturing output growth to improve to 0.7% y/y in September, which aligns with September’s expansionary PMI. Still, the broader stagnation is expected to continue.