RFA Breakfast Paper - May 12, 2026

South Africa Unemployment Rises Sharply in Q1 2026

The unemployment rate in South Africa climbed to 32.7% in Q1 2026 from 31.4% in Q4 2025, reflecting a sharp deterioration in labor market conditions. The number of unemployed people increased by 301,000 to 8.14 million, while employment fell by 345,000 to 16.75 million, pointing to broad-based weakness in job creation. The labor force participation rate declined to 59.0%, its lowest level since 2022, as more individuals exited the labor market. The number of people in the potential labor force—those available for work but not actively searching or unavailable despite seeking work—rose by 240,000 to 4.85 million. Broader indicators of labor underutilization also worsened significantly. The combined rate of unemployment and time-related underemployment increased to 35.9%, while the broader measure including the potential labor force rose to 43.7%. The most comprehensive measure of labor underutilization climbed to 46.3%, underscoring persistent structural weakness in the South African labor market despite earlier signs of economic stabilization.

U.S Equities Retreat as Sticky Inflation Dampens Rate-Cut Optimism

U.S. equities closed lower on Tuesday as investors reacted to an inflation report that came in slightly above expectations, reinforcing concerns that the Federal Reserve may maintain higher interest rates for longer. The market adopted a cautious tone throughout the session, with investors rotating into defensive sectors such as health care and consumer staples, while consumer discretionary and technology stocks lagged. Treasury yields moved higher following the inflation release, reflecting reduced expectations for near-term policy easing. Global sentiment also weakened, as Asian and European markets closed mostly lower amid renewed concerns over persistent inflationary pressures and tighter financial conditions. Meanwhile, oil prices extended recent gains due to ongoing disruptions in the Strait of Hormuz, while the stronger U.S. dollar was supported by rising bond yields and expectations of prolonged monetary policy restraint. Inflation in the U.S. rose to 3.8% year-over-year in April, slightly above expectations of 3.7%, driven largely by higher energy and shelter costs, while core inflation edged up to 2.8% from expectations of 2.7%. The data reinforced concerns that underlying price pressures continue to persist despite moderating economic activity. As inflation remains well above the Federal Reserve’s target and labor market conditions stay relatively stable, investors increasingly expect the Fed to keep interest rates elevated for longer, reducing expectations for near-term rate cuts.

NGX Rally Deepens as Banking and Energy Stocks Drive Fresh Gains

The Nigerian equities market closed higher as sustained buying interest in blue-chip stocks pushed the NGX All-Share Index up by 0.67% to 252,158.23 points, while market capitalization rose by 0.85% to ₦161.61 trillion. The stronger increase in market capitalization was partly supported by additional share listings within the banking sector. Investors maintained a positive risk appetite throughout the trading session, driving the market higher amid renewed confidence in large-cap and fundamentally strong counters. Trading activity also improved significantly, with total transaction volume climbing by 36.48% and total value traded advancing by 28.13%. By the close of the session, investors exchanged approximately 2.03 billion shares valued at ₦87.71 billion across 80,888 deals, highlighting stronger market participation and increased liquidity inflows into the equities market. Sectoral performance closed largely positive, with the Oil & Gas, Banking, and Consumer Goods sectors posting gains on renewed investor demand and bargain hunting in key counters. Banking stocks continued to attract strong interest, reinforcing bullish sentiment across the NGX, while energy stocks supported broader market momentum. However, profit-taking in Insurance and Industrial Goods stocks moderated the overall market breadth, although investor sentiment remained firmly positive by the close of trading.