South Africa’s unemployment rate rose to 25.5% in the third quarter, from 24.9% in the previous quarter, with the number of unemployed people increasing by 197 000, Statistics South Africa (Stats SA) said in its latest Quarterly Labour Force Survey (QLFS).

The agency put the number of unemployed people at 4.6-million – the highest level recorded since the QLFS started in 2008.

The Nedbank Group Economic Unit commented that the third-quarter unemployment number reflected a higher labour force count, which grew by 397 000 people to 18.31-million.

The number of employed persons also increased to 13.65-million during the third quarter, with a total of 198 000 jobs created, spurred by growth in the formal and informal sectors.

The informal sector created 112 000 new jobs during the quarter, which were mainly concentrated in the informal nonagricultural sector, namely construction, manufacturing and community and social services.

The formal sector, which accounted for 70.8% of total employment, created 92 000 new jobs. The majority of these job gains were in the finance and other business services, transport and manufacturing industries.

However, job losses totalling 38 000 were observed in the trade, mining and private household sectors.

Investec analyst Annabel Bishop pointed out that the expanded unemployment rate, which is the official unemployment rate plus discourage work seekers eased to 33.4% in the third quarter, from 33.5% in the second quarter, as the number of discouraged work seekers fell by 141 000 to 2.17-million.

“This is an important measure of unemployment as many discouraged work seekers are those who have become so impoverished they can no longer afford the transport costs required to seek employment. For this reason, the work seeker’s grant has been suggested, but government needs to be sure it is fiscally affordable in an environment where the number of civil servants is ballooning, particularly in administrative positions,” she said in a note.

Stats SA estimates that government employed 13 000 additional staff members in the third quarter.

Further, employment gains were detected in seven of South Africa’s nine provinces.

The highest increases were observed in Gauteng, Limpopo and the North West where a total of 171 000 jobs were created. However, in Mpumalanga and the Western Cape, job losses over the quarter amounted to 34 000.

Bishop said that South Africa’s authorities should focus “wholeheartedly” on reducing the prevailing policy uncertainty and rapid escalation in business costs that were hampering corporate sector investment and keeping the private sector from creating jobs.

“Enabling the business environment will allow for job creation, which has the potential to become a virtuous cycle, lifting gross domestic product and living standards for all, if effectively and consistently implemented over the next ten years,” she noted.

Meanwhile Nedbank said exports hurt by weaker global demand and domestic spending, which was likely to moderate on weaker consumer confidence, did not bode well for employment creation by the private sector, as firms could become more cautious in expanding capacity in the months ahead.

However, the banking group pointed out that employment by the public sector could improve somewhat as the government accelerated its infrastructure programme.

Nedbank said that although the rise in unemployment was worrying, it was not likely to influence the South African Reserve Bank's stance in the short term. “Other indicators showed stronger growth in credit demand and higher inflation, while the inflation outlook has also worsened. This lessens the chances of another interest rate cut in the short term.”

The firm also expected the Monetary Policy Committee to maintain an accommodative standpoint, keeping interest rates stable, with some reversal in policy easing likely in the latter part of 2013 or early 2014.