Statistics South Africa has reported that South Africa's unemployment rate fell to 31.4% in the last quarter of 2025, the lowest it has been in over five years. This decline from 31.9% in the previous quarter also beats the economists' forecast of 31.7%. Net employment figures reflected a modest increase of 21,000 jobs over the year, notably in sectors such as transport, social services, and construction. Despite this, South Africa still grapples with a significant unemployment crisis, with around 8.4 million people currently jobless.

The persistent high unemployment rate in South Africa, which has remained above 30% since 2020, raises questions about the effectiveness of policies aimed at boosting job creation and economic growth. Policymakers see these new figures as a potential sign of resilience and are gearing up for the upcoming national budget announcement on February 25. Finance Minister Enoch Godongwana is anticipated to present crucial measures designed to stimulate growth and employment amidst the ongoing economic challenges.

Supportive factors include improved electricity supply and reduced logistics bottlenecks which have enhanced economic activities. The International Monetary Fund has projected a modest growth rate of 1.4% for South Africa in 2026, slightly higher than the previous year's forecast of 1.3%. Morgan Stanley's expectations for future growth may hinge on how well South Africa navigates its structural issues in the labor market and broader economic environment.