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Stats SA’s official unemployment rate as published today should be treated with caution.

According to Stats SA South Africa’s official unemployment rate decreased to 24.9% in Q2 2012 from 25.2% in Q1 2012. As we understand, this is mainly on account of the number of unemployed decreasing by 56 000 to 4.47 million.

These numbers, especially the reduction in the number of unemployed, should be treated with caution for a number of reasons:

Firstly, analysis of the decrease in the number of unemployed shows that the number of workers who lost their jobs actually increased by 58 000 to 1.458 million in Q2 2012. In addition, the number of unemployed new entrants to the labour market decreased by 69 000, whilst the number of workers leaving their jobs also decreased by 43 000. Add to that the number of re-entrants, which also decreased by 3 000, and it reveals the 56 000 reduction in the number of unemployed. It is therefore more a case of a decline in the number of entrants to the labour market than an increase in the number of jobs created which explains the decline in the number of unemployed.

Secondly, analysis of the number of employed, which increased by 25 000 in Q1 2012, shows that the increase in the number of workers in the volatile mining sector can explain much of this change. Fascinatingly, however, Stats SA mentions that the mining sector numbers should be ignored for various reasons. If indeed ignored, the number of employed shows an increase of 4 000 only.

Considering the above, it means that the adjusted unemployment rate declined to 24% from 24.2%. This is higher than the adjusted 23.9% registered in Q3 2011 (Q4 2011 and Q1 2012 are ignored due to seasonality reasons) and thus suggests an increase in unemployment compared to six months ago.