Van Vuuren: Job loss crisis imminent – Solidarity undershot with 60 000

In response to the Solidarity research which sees that at least 60 000 jobs are hanging in the balance, Dwaine van Vuuren has put his mind to the issue. And it’s not pretty reading. Van Vuuren says given the recent down trend in Business Confidence, it’s unlikely South Africa will avoid a recession, within the next four quarters. And if so, the Solidarity report numbers could climb to well over 100 000 in the next 12-18 months - fuelling an impending job crisis and all that comes with it. – Stuart Lowman

By Dwaine van Vuuren*

An absolutely shocking article on SA job losses since 2015 was published today (see Nearly 60 000 in SA face jobs axe).

But frankly it should come as no surprise (see Nov 15 article, SA’s ‘Zombie’ economy. A Zuma recession on the cards).

The SA Economic Business Cycle Index dropped further for the month of February 2016, taking us into the 27th month of this Business Cycle contraction.

According to an announcement by the South African Reserve Banks last month, the current economic expansion peaked on November 2013.

It is not uncommon for a central bank to declare the peak of a business cycle 18-24 months after the fact, since they wait for all data revisions, seasonal adjustments and negative trends to appear across all sectors monitored to be absolutely sure of their proclamations.

Our own rendition of the SA Business Cycle (below) peaked in December 2013, and this peak was known to us on March 2014 already, a full 24 months before the SARB proclamation:

The scary part about those job losses is that it has been against the backdrop of an exceptionally slow rollover into growth recession as shown by the historic behaviour of the Business Cycle Index going into the last 10 recessions since 1965:

We see from the above that history shows a rapid plunge lower is still on the cards, probably from some exogenous shock such as resumption of interest rate hikes in the US, an SA junk rating, another rand shock or another episode of shooting ourselves in the political foot (Nenegate).

It is also quite conceivable that this contraction continue for another 12-18 months.

Given the BCI is increasing on a downward slope, it would be highly unlikely we will be able to avoid a classic GDP recession (2 consecutive negative quarters growth) within the next 4 quarters.

So the numbers in that Solidarity report could climb to well over 100 000 within the next 12-18 months.

It will not be long before we start talking about a job loss crisis.

• Dwaine van Vuuren has a BSc (Hons) degree and is a full-time trader, global investor and stock-market researcher. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT.com and PowerStocks.co.za into companies used by hundreds of hedge funds, brokerage firms, financial advisers and private investors around the world. He now also heads up Research at Sharenet.

A gifted educator, he’ll have you trading and investing with confidence & discipline. You can see Dwaine on his regular national roadshows by booking www.sharenet.co.za/events.

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