South Africa kisses over 750 businesses goodbye – in only six months

759 businesses have shut down in South Africa since the start of the year, but this is down from a year prior.

According to Stats SA’s latest data, 121 companies were liquidated in June 2024.

104 of these closures were voluntary (12 less than in June 2024), while 17 were compulsory (5 more than in June 2024).

That said, the number of liquidations in Q2 2024 decreased by 4.3% from 391 in Q2 2023 to 374.

The number decreased by 5.4% from 802 in the first half of 2023 to 759 over the first six months of the year.

When it comes to specific industries, the unclassified (259) businesses saw the most liquidations in 259, followed by financing, insurance, real estate, and business services (207) and trade, catering, and accommodation (146).

On the other end of the scale, only one business has been liquidated in the electricity, gas and water industry.

Despite being lower than last year’s stats, the high number of liquidations will do little to help add desperately needed jobs in South Africa.

Although the Absa Purchasing Managers’ Index (PMI) increased from 45.7 in June to 52.4 in July 2024 (above the natural 50-level index), the employment index dropped from 46.3 in June to 45.4 in July.

Investec Economist Lara Hodes said that a sustainable lift in business confidence and growth is needed to rectify South Africa’s unemployment predicament.

The latest Quarterly Labour Force Survey (QLFS) South Africa’s official unemployment rate is currently at 32.9%

The QLFS data broadly aligns with the Quarterly Employment Statistics (QES).

QES data specifically reflects the number of people receiving formal salaries, and the QLFS follows more comprehensive employment and unemployment trends.

The QES showed that total employment decreased by 67,000 or -0.6% quarter-on-quarter, from 10,731,000 in December 2023 to 10,664,000 in March 2024.

This was due to decreases in the following industries:

• Trade (-57,000 or -2.4%)
• community services (-18,000 or -0.6%)
• business services (-4,000 or -0.2%)
• mining (-3,000 or -0.6%)

However, there were increases in the following industries:

• manufacturing (12,000 or 0.9%)
• transport (2,000 or 0.4%)
• construction (1,000 or 0.2%)

Total employment decreased by 74,000 or -0.7% between March 2023 and March 2024.

Full-time and part-time employment decreased by 16,000 or -0.2% and 38,000 or -3.1% quarter year-on-year, respectively.

There is hope that the Government of National Unity (GNU) will spearhead growth initiatives that will boost employment levels across the country.

Currently, South Africa’s economy is only expected to growth by around 1%, which will likely not be enough to meet the nation’s population growth, which generally averages 1.5% per year.

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