News in South Africa 9th May:
1. Unemployment numbers wrong:
The head of the Statistics Council, the advisory board to Statistics SA, has raised the alarm on the quality of SA’s employment statistics, saying the poor response rate must be reversed if the numbers are to be worth anything.
The last Quarterly Labour Force Survey (QLFS), which was for the fourth quarter of last year revealed, on the narrow definition, that 35.3% of adults were unemployed. This is a record high since the survey began in 2008. Several economists have questioned the numbers who argue that the survey does not provide an accurate picture of the country.
Of the sample of 30 000 households, the response rate hit a record low, with only 44.6% of the sample participating in the survey. In Gauteng, only 23% of respondents replied, with the response rate in the city of Johannesburg at 17.9%. The response rate led to a delay in the publication of the results and some results – such as those for the metros – were excluded from publication.
2. Interest hike looming:
South Africa is likely to see another interest rate hike next week, although the increase could be larger than previously forecast, say economists at the Bureau for Economic Research (BER).
“Against the global backdrop of more rapid policy normalisation and, importantly, the associated recent sharp weakening of the rand exchange rate, and the sustained upside risks to domestic inflation, we now expect the South African Reserve Bank (SARB) to hike the repo rate by 50bps next week,” the group said in a research note on Monday (9 May).
“This is a change from the previous view for a 25bps hike at the May policy meeting. The SARB’s decision is unlikely to be unanimous,” it said.
The forecast comes after the US Federal Reserve hiked its policy rate by 50 basis points (bps) last week, which was the biggest increase in more than twenty years – although some market players had bet on a 75bps hike this month.
Going forward, Fed chair Jerome Powell signalled that 50bps increases were also likely at the next two meetings (June and July), with a probable return to 25bps increment increases from September.
In the UK, the Bank of England (BoE) raised its policy interest rate by 25bps. It was the fourth consecutive meeting where the UK policy rate was increased. While these rate hikes were in line with the consensus expectation, some other central banks surprised by being more hawkish than expected.
This includes a 40bps interest rate hike by the Reserve Bank of India at an unscheduled meeting, and the Reserve Bank of Australia lifting by a bigger-than-expected 25bps. Some emerging market central banks – including Poland and the Czech Republic – hiked by 75bps, with similar hikes expected next month.
Furthermore, the European Central Bank (ECB) is now expected to join the rate-hike crowd as early as July, with above zero policy rates projected by the end of the year.
3. Covid regulation deadline:
Consultation with the public over new health regulations has been extended until 5 July
Deputy Health Minister, Sibongiseni Dhlomo says in the meantime, pupils must still wear masks at school as COVID-19 numbers continue to rise, and experts say the fifth COVID-19 wave is upon us.
He said, “we have extended this period of consultation and comments on regulations up to 5 July but there were three specific regulations that we want to champion earlier ahead of the rest.”
“The wearing of masks which actually there was a challenge and mistake, we still insist of wearing of the masks in school, high school, primary school as we insist on wearing of the mask in any close confinement.”
“Number two: it was the issue of gathering, we want to make sure that gatherings are at this number, 1,000 indoor and 2,000 outdoor and if you want to have 50-percent of the venue, 6,000 auditorium in church and half of that when people are wearing masks, the third one is in regards to travelers…”
“While we are busy getting more comments, we would like have these ones going forward guiding us.”
4. Eskom burning through diesel:
Eskom is burning more diesel than ever to keep the lights on. Hundreds of millions were spent last week, even with load shedding.
During the evening peak last week, Eskom utilised its diesel-burning open cycle gas turbines (OCGTs) for all but one of the 24 hours that made up the time of day where demand is greatest.
Public data from the utility shows that Eskom made use of its OCGTs between (at least) 4pm and 10pm every day between Tuesday and Friday (Monday was a public holiday, yet it still used these turbines between 5pm and 9pm).
In addition, it called on independent power producer (IPP) operators at the Avon and Dedisa peaking power plants to operate their diesel turbines for the same 23 of 24 peak hours (the only hour neither Eskom nor the IPP OCGTs were used was at 9pm on Friday, when demand is far lower than on other weekdays).
Eskom will argue, as COO Jan Oberholzer did in March, that: “They were always intended to be used … early in the morning and late in the afternoon when there is a lot of demand on the country.”
But it is obvious that they were not intended to be used for practically every single hour of peak every single weekday.
It also used the OCGTs fairly extensively in the morning peak last week. This as Eskom implemented Stage 2 load shedding at 5pm on Tuesday and said this would continue to Monday. It reduced this to Stage 1 on Friday night at 10pm and suspended load shedding altogether at 12 midday on Saturday.
5. Standard Bank restored:
Standard Banks says it has restored all services following a major outage impacting ATMs, point of sale credit card transactions, and more on Sunday afternoon.
Standard Bank clients were left in the lurch on Sunday when multiple services crashed. The bank confirmed that its mobile app, internet banking, credit cards, points of sale, and ATM services were disrupted on Sunday afternoon, shortly after 13:00.
“We are sorry that you are not able to access our Banking App, Internet Banking, USSD or transact with Credit Cards, Point of Sale (POS) and ATMs,” the bank said via Twitter and Facebook.
“Please use your Debit Card to transact in the interim. We are working urgently to fix this issue and sincerely apologise for the inconvenience caused.”
Around 16:00 on Sunday, three hours after the issue was first flagged on its status tracker, Standard Banks said its services had been restored.