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Data to shed light on how lockdown hit jobs

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The release of longdelayed unemployment numbers and the first official figures to provide an insight into how badly the hard lockdown affected SA’s jobless rate, will be a feature in what is going to be a data-heavy week.

The quarterly labour force survey (QLFS) for the second quarter, which Stats SA has had to delay twice, is due out on Tuesday. It is expected to show a sharp increase in SA’s unemployment rate, which at 30.1% in quarter one, was already a record high before the advent of the lockdown.

The median estimate from a Bloomberg survey of nine economists is for an increase in unemployment to 34.8% in the second quarter, but some forecast it as high as 50%.

The official data is going to be followed on Wednesday by the release of the second wave of the National Income Dynamics Study-Coronavirus Rapid Mobile Survey (NIDS-CRAM).

The research, from a consortium of 30 social science researchers, from five SA universities, is one of the most comprehensive examinations of the effect of the coronavirus on employment and welfare on SA’s households. The first wave of the study painted a frightening picture of the effect of the virus, indicating that about 3-million people lost their jobs between February and April.

The second wave is expected to provide insight into whether any of the 3 million jobs lost have been recovered between April and June and whether hunger levels among households have improved.

On Tuesday the SA Reserve Bank is set to release its quarterly bulletin for the second quarter. The bulletin, which will be released just ahead of the QLFS, will give further insight into the financial state of households. According to FNB, the bulletin will “likely reveal some rather perturbing statistics for households including a sharp downturn in households’ real disposable income and a deterioration in net wealth.”

Both producer and consumer price inflation figures for August are also due out on Monday and Wednesday respectively. After breaching the lower bound of the Bank’s target range of 3% to 6%, annual consumer price inflation picked up to 3.2% in July.

The median estimate from a Bloomberg poll is for consumer inflation to stay at 3.2%. But FNB expects it to come in even lower, at 3% year on year. It believes it will remain below the midpoint of the Bank’s inflation target “for the remainder of this year and the next as businesses continue to struggle to pass on material price increases amid a highly price elastic consumer due to a significant downturn in income prospects.”

At its latest decision on interest rates the Banks revised down its inflation forecast expecting it to average 3.3% in 2020, 4.0% in 2021 and 4.4% in 2022. The lower inflation outlook — all below the 4.5% midpoint or the range — did not, however, prompt the Bank to cut rates again.

SA trade data and private credit extension figures are out on Wednesday. The Bloomberg forecast is for credit extension in August to slow to 4.9% year on year from July’s 5.1%.

Despite the Bank holding the policy rate at its lowest level in about 47 years, as well as the implementation of the R200bn loan guarantee scheme to support businesses, households and firms appear reluctant to take on more debt.

By July credit growth has slowed for four consecutive months and reached its lowest level since January.

“Credit demand from both households and corporates has been affected by uncertainty over future income and turnover, in the context of a severely depressed economy,” said Investec economist Kamilla Kaplan. “On the supply side, concern over creditworthiness is likely to see strict lending criteria being applied.”

On Thursday the Absa Purchasing Managers’ Index (PMI) as well as new vehicle sales for September are due out.

Expectations are for the PMI to remain in positive terrain at 55 points, according to Bloomberg, though this is down from August’s 57.3.

Depressed consumer and business confidence combined with the uncertain economic outlook are likely to have continued curbing new vehicle sales, said Kaplan.