South Africa jobless rate rises before Iran war fallout hits

South Africa’s unemployment rate rose more than expected in the first quarter as job losses in sectors including construction and community services weakened the labor market, even as the full impact of the Iran war is yet to filter through.

The rate rose to 32.7% in the three months through March from 31.4% in the prior quarter, according to data released by Statistics South Africa in Pretoria on Tuesday. The median estimate of three economists in a Bloomberg survey was 31.7%.

The rise in the number of unemployed to 8.1 million is a blow for South Africa’s fragile economy that is also confronting fresh challenges from the war, which prompted the International Monetary Fund last month to lower its 2026 forecast for the nation’s economic growth to 1% from 1.4% previously.

Energy, food and fertiliser prices have soared since the US and Israel attacked Iran on February 28, creating potentially serious challenges for oil-importing nations like South Africa.

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While the full impact of the conflict has not yet registered in the broader economy, jobs in fuel-intensive sectors such as transport, mining, and agriculture are likely to be the most vulnerable, said Keabetswe Mojapelo, macroeconomist at Rand Merchant Bank.

The bulk of the job losses were in construction and community and social services while manufacturing and mining added workers.

The extent of the labor-market damage will depend on how long the war drags on, said Isaac Matshego, senior economist at Nedbank Group Ltd.’s economic unit.

“There will be a negative impact on all of the economy, but more specifically industries that rely most on trade” he said. “Consumer facing sectors will be affected from the erosion of spending power.”

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High unemployment in Africa’s largest economy has also fanned frustration that’s spilled into anti-immigrant protests in parts of the country in recent weeks.

The xenophobic sentiment has sharpened pressure on the government before local elections scheduled for November 4, with some groups blaming foreign nationals for a lack of jobs and straining already fragile public services.

The unemployment crisis requires urgent, practical reform, said Geordin Hill-Lewis, leader of the Democratic Alliance, the second-largest partner in the coalition government formed after the African National Congress lost its outright majority in the 2024 elections.

“Economic reform has been too slow, too cautious, and too easily displaced by other political priorities,” he said. “A country with unemployment at these levels cannot afford to treat growth as one item on a long agenda. It must be the agenda.”

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