With August coming to an end, we’re starting to take stock of the past couple of months and prepare for the future. This week marked several important data releases, many of which will provide insight into how well our economy is doing. StatsSA recently released the Quarterly Labour Force Survey (QLFS) for Q2, which indicates that South Africa’s unemployment rate is at a record high since the QLFS commenced in 2008. More specifically, the unemployment rate rose 1.8 percentage points, from 32.6% in Q1 to 34.4% in Q2, with the number of employed persons decreasing by 54,000 and the number of unemployed persons increasing by 584,000 to 7.8 million. It’s important to note that the QLFS uses the expanded definition of unemployment that includes individuals actively seeking employment as well as discouraged unemployed persons. This surge in unemployment can, in large part, be attributed to the 2020 COVID-19 lockdown, which brought South Africa’s economy to a near standstill, shocking the labour market in the process, and changing the way people went about doing their work. Our country is still experiencing the consequences of 2020, and while our economy was thought to be on a positive growth trajectory at the start of 2021, but with repercussions from the civil unrest in July still being felt, a harsh third wave of the virus, and now unprecedented levels of unemployment, there are undoubtedly uncertain times ahead for our country.
StatsSA also released liquidation and insolvencies data for July, reporting that there was a 21.5% year-on-year increase in liquidations between January and July 2021. The business services industry (finance. Insurance, and real estate) was registered to have the most liquidations, with 375 companies liquidating during the January-July time period. Insolvencies were also reported to have increased by 103.1%in the second quarter of 2021 in comparison to the second quarter of 2020. StatsSA also announced that the total income for the tourist accommodation industry in June increased by over 1,000% year-on-year. This is a step in the right direction for the hospitality sector, especially considering the industry was amongst one of the hardest hit sectors of South Africa’s economy. One of the major contributing factors for this increase in income is due to the economy opening up more in comparison to 2020’s harsh lockdown.
On the virus front, the South African government decided to open vaccine registration for people under 35 years of age on Friday, August 20, which is earlier than the intended set date September 1. This makes 17 million people eligible for the vaccine, and will go a long way in our country’s efforts to attain herd immunity by the end of 2021. The vaccination numbers already look promising, with youngsters populating vaccine sites this past weekend. Irrespective of this, the cases are still rising in South Africa, with a large number of cases reported in the Western Cape and KZN. This has prompted our government to prolong adjusted level 3 lockdown for another two weeks, with a high chance that adjusted level 3 lockdown will remain past the two week mark if the infection rate hasn’t lowered during this time period.
There’s a lot of uncertainty surrounding us, but don’t give up hope and keep pushing, and if you find you need a helping hand, please reach out to the COBRA Initiative for business and financial support.
Related Tag: Turnaround Strategies
