July PPI jumps to 18.9%

This rate is 2.1 percentage points higher than the corresponding annual rate of 16.8% at June 2008, according to data released by Statistics South Africa (Stats SA) on Thursday, 28 August 2008.

The higher annual rate in July 2008 compared with that in June 2008 is as a result of increases in the annual rate of change in the Producer Price Indices for basic metals, electricity, food at manufacturing, fishing, chemicals and chemical products, metal products, rubber and plastic products and paper and paper products.

Counteraction

These increases, according to Stats SA, were partially counteracted by decreases in the annual rate of change for mining and quarrying, tobacco products and beverages.

With regards to energy commodities, electricity costs went up by 31.3% year-on-year in July.

Imported commodities inflation was a little slower at 22.8% compared to 24.6% previously.

An expert was reported as saying that said the increase was disappointing because analysts had hoped for the number to come in below 10 again.

The figures follow a jump in consumer inflation to a record 13% year-on-year, although the increase had been widely expected due to a large annual rise in electricity tariffs from July.

Inflation expected to drop

Inflation is expected to ease sharply in 2009, in part due to a reweighting and rebasing of the consumer inflation basket, raising further prospects of rate cuts next year.

The central bank left its repo rate unchanged at 12% earlier this month, citing concerns about growth and a better inflation outlook, after raising rates by 500 basis points since June 2006.

Labour force survey results

Stats SA also released the labour force survey on Thursday, which showed South Africa's unemployment rate had decreased slightly.

Unemployment dropped to 23.1% in the quarter of 2007 from 23.5% recorded during the same period last year.

The unemployment rate dropped from 23.5% in the first three months of the year.

The survey, which provides estimates of employment in both the formal and informal sectors, showed the number of employed people was 0.8% higher than in the first quarter, with largest number of jobs created by the community and social services.

This means that the number of unemployed persons fell by 77,000 to 4.1 million in the second quarter, Stats SA said, noting this was largely due to a decline of 72,000 among unemployed men.

“In the second quarter of 2008, the number of employed persons was 0.8% higher than in the first quarter of 2008 (an increase of 106 thousand - from 13.6 million to 13.7 million).

“This was largely on account of an expansion in formal sector employment (non-agricultural) from 9.3 million in Q1:2008 to 9.4 million in Q2:2008 - up by 73 thousand (0.8%), although employment in the informal sector also rose by 21 thousand (0.9%),” said Stats SA.

It attributed the marginal drop to increased employment in the community and social services industry.

Employment in mining rose 3.9% to 346,000 in the second quarter from the previous three months, while jobs in the transport industry increased 3.6% to 774,000, the report revealed.

The trade industry, the biggest employer in the economy, lost 51,000 jobs (about 1.6%), to 3.1 million.

Article published courtesy of BuaNews