South Africa's unemployment rate edges up to 32.9% in Q1’25

South Africa's official unemployment rate has increased by a full percentage point to 32.9% in the first quarter of 2025, according to the quarterly labour force survey. Johannes Khosa, an economist at Nedbank, provided insight into the grim statistics and the potential outlook for the country's economy. In the first quarter, the economy lost a total of 291,000 jobs, with the formal sector bearing the brunt of the losses. Construction and trade industries suffered the most significant job cuts, highlighting the ongoing challenges in job creation compared to the expanding labour force. Khosa indicated that the tough operating environment, high operating costs, and low demand are major obstacles preventing companies from expanding and hiring more employees. However, he expressed optimism for the second half of the year, citing potential boosts in demand due to low interest rates and inflation, as well as government-led fixed investment programs. Despite uncertainties, particularly related to tariffs and global trade tensions, Khosa remains hopeful for a slight improvement in the economic landscape. The impact of tariffs, especially on manufacturing and mining sectors, could hamper job creation in these industries. On a positive note, the services sector may benefit from increased consumer spending, leading to potential private sector investments. In terms of economic growth forecasts, Nedbank has revised its projection down to 1%, considering the various factors at play, such as Chinese demand for exports, tariff implications, and cautious monetary policy decisions. Khosa suggested that further adjustments to interest rates by the Reserve Bank could stimulate economic activity if the situation stabilizes. Overall, while the current outlook remains challenging, there is a glimmer of hope for South Africa's economic recovery, albeit gradual and contingent on various domestic and global factors.