S/Africa’s unemployment falls to 26.5% in Q4 2016

South Africa’s unemployment rate in the fourth quarter of last year retreated from its highest in 13 years as key sectors hired more workers, a further sign of recovery in an economy that flirted with recession in 2016.

Unemployment stood at 26.5 percent of the labour force in the fourth quarter, down from 27.1 percent in the third quarter, data from the statistics office showed on Tuesday.

In its quarterly labour force survey, which polls households, Statistics South Africa said this amounted to 5.781 million people without jobs in the fourth quarter compared with 5.873 million previously.

Stats SA said the growth in employment was mainly driven by the services industry and the transport and manufacturing sectors.

The currency responded by firming more than one percent to its strongest in three months against the dollar, having already gained earlier as global risk sentiment improved following the resignation of the U.S. national security adviser.

An economist at Nedbank, Johannes Khosa, said the South African data showed that economic conditions were improving, but warned that the decrease in joblessness was coming off a very low base and that the improvement would be difficult to sustain.

“Remember the numbers are not seasonally adjusted and you find that firms tend to employ more people in the fourth quarter so it’s hard to read too much into the figures,” Khosa said.

South Africa’s economy is set to have expanded by only 0.4 percent in 2016, according to the Reserve Bank, which also estimates growth of 1.1 percent for 2017, well short of the government’s target of 5 percent annual growth.

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The expanded definition of unemployment, which includes people who have stopped looking for work, also decreased, to 35.6 percent in the fourth quarter, from 36.3 percent in the previous quarter.