South Africa’s rand extended losses against the US dollar on Tuesday after new data showed unemployment climbed sharply in the first quarter, underscoring persistent economic challenges in Africa’s most industrialised economy.
The rand traded around 0.5 percent weaker at 16.5175 to the dollar in afternoon trading after official figures revealed the unemployment rate rose to 32.7 percent in the January-to-March period, up from 31.4 percent in the previous quarter.
The data, released by Statistics South Africa, showed the number of unemployed people increased to more than 8.1 million.
South Africa’s official unemployment rate has remained above 30 percent for more than five years and is among the highest globally.
Economists said the latest figures reflected continued weakness in job creation and broader structural problems in the economy.
Analysts at Nedbank said rising unemployment was driven by job losses and inadequate labour market expansion, compounded by discouraged workers abandoning efforts to find employment.
The bank also warned that the ongoing conflict involving Iran and its impact on global energy markets could create additional economic pressure for South Africa.
Higher oil prices and possible supply disruptions are expected to affect sectors heavily dependent on fuel, including agriculture, manufacturing, transport and logistics, the bank said.
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Global market sentiment also weighed on the rand after fresh US inflation data strengthened expectations that American interest rates could remain elevated for longer.
The US dollar gained ground against major currencies after data from the Bureau of Labor Statistics showed consumer prices rose for a second consecutive month in April.
A stronger dollar typically puts pressure on emerging market currencies such as the rand.
Despite the negative labour market figures, separate economic data offered some signs of resilience in South Africa’s manufacturing sector.
Manufacturing output rose 0.9 percent year-on-year in March, outperforming analysts’ expectations of a 0.3 percent increase.
However, economists cautioned that isolated improvements in manufacturing were unlikely to offset broader concerns about sluggish growth, high unemployment and rising living costs.
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The weaker rand also contributed to declines on the Johannesburg Stock Exchange, where the Top-40 index fell around 1.4 percent during the session.
Meanwhile, South Africa’s benchmark 2035 government bond weakened, with the yield rising 8.5 basis points to 8.78 percent, reflecting investor caution.
The coalition government formed in 2024 has faced mounting pressure to stimulate economic growth and create jobs, particularly among young people and women, who remain disproportionately affected by unemployment.
Economists say structural reforms aimed at improving electricity supply, logistics and investor confidence will be critical to boosting employment and sustaining long-term growth.
South Africa’s economy has struggled in recent years with chronic power shortages, infrastructure bottlenecks and weak business confidence, although recent reforms have raised hopes of gradual recovery.
Analysts say markets are likely to remain sensitive to both domestic economic data and global geopolitical developments, particularly movements in oil prices and US monetary policy.
