South Africa’s 23% Jobless Rate Probably Increased: Week Ahead

March 2 (Bloomberg) -- South Africa’s unemployment rate, the highest of 61 countries tracked by Bloomberg, may have increased for the first time in three years as manufacturers and miners cut jobs.

The rate probably rose in the fourth quarter from 23 percent in the previous three months, according to Sanlam Investment Management and Old Mutual Investment Group, two of South Africa’s three largest private money managers. The statistics office will publish the data at 11:30 a.m. in Pretoria today.

South Africa’s economy, the biggest on the continent, contracted for the first time in a decade in the fourth quarter as a global economic recession slashed demand for platinum and steel. ArcelorMittal South Africa Ltd., Africa’s largest steelmaker, cut 1,000 contractor jobs in December, while carmakers such as General Motors Corp. shut its South African plant for most of December.

“The outlook is bleak,” said Arthur Kamp, an economist at Cape Town-based Sanlam. “Private sector fixed investment growth has slowed and will probably decline this year. That is going to be a drag on employment. We are seeing job losses in the mining and manufacturing industries now, but that will likely spread to the retail and financial services sectors.”

Election Promise

Gross domestic product contracted an annualized 1.8 percent in the fourth quarter, undermining a government pledge to cut the unemployment rate to 14 percent by 2014. The ruling African National Congress promised in its election manifesto this year to make “decent work opportunities” the main focus of its economic policy.

“I would expect the unemployment rate to rise,” said Rian Le Roux, chief economist of Cape Town-based Old Mutual. “We’ll see another poor GDP growth number in the first quarter, if not a contraction.”

Investec Asset Management will tomorrow publish the Purchasing Managers Index, an indicator of manufacturing output. The index has been below 50, signaling a contraction in production, since May 2008.

The National Association of Automobile Manufacturers will also publish vehicle sales data for February tomorrow.

The Reserve Bank is scheduled to release gross gold and foreign currency reserves data for February on March 6. Reserves fell for the first time in three months in January after the dollar strengthened, cutting the value of reserves held in euros and other currencies, the bank said on Feb. 6.

Earnings Decline

On the corporate front, Standard Bank Group Ltd., Africa’s biggest lender, may post a decline of as much as 12 percent in full-year earnings per share as the economy faltered and it sold new stock to Industrial & Commercial Bank of China Ltd., the lender said Feb. 20. The earnings will be published March 5.

Sanlam Ltd., the largest South Africa-based insurer, also reports full-year earnings March 5 and may say per-share earnings before one-time items fell between 35 percent and 45 percent after tumbling stock markets cut the value of its investments, the Cape Town-based company said Feb. 6.

The rand gained for the first time in three weeks, climbing 0.5 percent against the dollar last week, to close at 10.0703. Government bonds fell for a fourth week, with the yield on the benchmark 13.5 percent security due September 2015 rising to 8.04 percent from 7.99 percent a week before. Bond yields move inversely to prices.

The benchmark FTSE/JSE Africa All Share index declined 4.8 percent, the third weekly drop. Sappi Ltd., the world’s largest maker of glossy paper, tumbled 21 percent. Anglo Platinum Ltd., the world’s biggest producer of the metal, declined 16 percent.