The labour market remains depressed and the best antidote to ending lockdowns and restrictions is getting people vaccinated, say Nedbank economists.<\/p>\n
While some 847,000 people had found employment since April last year, the economy is still short a massive 1.4 million jobs<\/strong> compared to Q1 2020 before the pandemic struck, the bank said in a research note this week.<\/p>\n Added to this bleak reality, the number of discouraged workers – those who have stopped looking for work altogether – has increased throughout the pandemic rising to 3.1<\/strong> million<\/strong> in Q1 – the highest level since the Labour Force Survey started just over 12 years ago.<\/p>\n “The third wave, and further spells of rising Covid infections, will hurt employment. But personal income returned to 2019’s levels despite the dismal jobs situation,” Nedbank said.<\/p>\n “The heavy lifting was done by employee remuneration, some normalisation in other income sources, and receding inflation. This trend is likely to continue, albeit at a much slower pace, during the rest of this year.”<\/p>\n The bank forecasts that jobs will eventually return with greater conviction in 2022, but even then, progress will slow.<\/p>\n These slight gains coupled with moderate growth in wages and salaries are forecast to sustain personal income from next year onwards, it said.<\/p>\n Conservative saving\u00a0<\/strong><\/p>\n Households have also been conservative, rebuilding savings as a hedge against uncertainty, the bank said.<\/p>\n “Households became net savers in 2020 and remained so in Q1. Wealth also increased, jumping to 387% of disposable income in Q1.<\/p>\n “The resurgence in equity prices and measured growth in house prices lifted assets while subdued borrowing kept liabilities in check.”<\/p>\n The stash of savings and higher wealth suggest households have the means to accelerate spending once confidence returns, Nedbank said.<\/p>\n There was some evidence of this in April and May when bank deposits slowed while loans accelerated.<\/p>\n “However, the third wave will hurt confidence, thereby encourage savings, dampen credit demand and subdue spending. The disruption is likely to be temporary.<\/p>\n “There is no way of knowing how long the third wave will rage, but if it follows a similar course to the second wave, the worst should be over by the end of July. Experience suggests that consumer spending tends to bounce back relatively quickly.”<\/p>\n
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