South Africa’s formal economy contracts in 3Q24 amid job losses

Source: Supplied. Koketso Mano, FNB senior economist.

Many of the jobs shed were in community services, primarily reflecting part-time jobs lost between 2Q24 and 3Q24. Compared to 3Q23, over 290,000 jobs (2.7%) have been lost but over 380,000 jobs have been added since 3Q19. There were 10.6 million workers in the formal economy in 3Q24.

Job losses were recorded in community services (-131 000 or -4.3% q/q), followed by business services (-15 000 or -0.6%), manufacturing (-4,000 or -0.3%), transport (-3 000 or -0.6%), mining (-2 000 or -0.4%) and electricity (-1 000 or -1.6%).

Meanwhile, gains were recorded in trade (19,000 or 0.8%) and construction (4 000 or 0.7%). Full-time jobs declined by 14 000 q/q and 44,000, or 0.5% y/y. Most of the jobs lost in business services and those added in trade were full-time jobs. Part-time employment decreased by nearly 120,000 jobs, or 9.4% q/q, and 250 000 jobs have been lost compared to 3Q23 (-17.8%).

There were under 1.2 million part-time workers and under 9.5 million full-time workers in 3Q24. Total gross earnings increased by 1.3% q/q and were 2.6% higher than in 3Q23.

Notably, earnings were 32.5% higher than 3Q19 levels, beating inflation of 27.4%. Basic salary/wage payments were higher by 0.8% compared to the previous quarter, and 3.4% higher than 3Q23. Overall average monthly earnings (including overtime and bonuses) were up by 2.6% q/q and 6.6% higher than a year ago.

Outlook

The outlook on the South African economy has improved, with growth expected to approach 2% as early as next year. Structural reform, and related investment, should support a more conducive operating environment, productivity, profitability, and employment creation.

Furthermore, structurally lower operating costs will be crucial for lowering broader inflation and boosting real incomes. Near-term gains from infrastructure maintenance and investment should benefit sectors such as construction, barring crime-related impediments. A lower cost of living and rising domestic demand should support sectors such as manufacturing, trade, and finance.

Over the longer term, gains should be more broad-based as per capita shares gradually rise, South Africa’s attractiveness improves, and innovation lifts.