By Kopano Gumbi

PRETORIA (Reuters) -South Africa’s official unemployment rate dropped marginally in the second quarter to 32.6%, its lowest level since the first quarter of 2021, data showed on Tuesday.

Statistics South Africa said the number of people with jobs rose to 16.3 million in April-June, approaching the pre-COVID level of 16.4 million and the seventh consecutive quarterly rise in employment.

Africa’s most industrialised economy has one of the highest unemployment rates in the world, with the pandemic exacerbating longstanding structural problems linked to the legacy of apartheid and colonialism.

A major constraint in the last decade has been rolling power blackouts that have slashed the country’s growth potential and hurt businesses of all sizes.

The economy did manage to eke out growth of 0.2% in annual terms in the first quarter of 2023, but the central bank thinks growth would be closer to 2% in the absence of power cuts.

Stats SA data showed the number of unemployed people was 7.921 million in the second quarter, compared with 7.933 million in the first quarter.

According to an expanded definition of unemployment that includes those discouraged from seeking work, 42.1% of the labour force was jobless in April-June, compared with 42.4% in January-March.

Analysts had predicted the official unemployment rate would be 32.9% in the second quarter, the same as in the first.

In a reflection of how the past decade’s anaemic growth has affected joblessness, nearly 3 million more people have become unemployed since the second quarter of 2013.

The proportion of those in long-term unemployment has increased from roughly 67% to 77% over the past 10 years.

(Reporting by Kopano GumbiEditing by Alexander Winning)

By James Davey

(Reuters) -British retailer Marks & Spencer raised its profit outlook on Tuesday, saying demand in stores had helped it to win new customers for its clothing, home and food businesses, sending its shares up sharply.

The 139-year old group, whose shares have risen 66% so far this year, said it now expected profit growth in its full 2023-24 year, having previously forecast a small decline. Its shares jumped 8%.

Like other major British retailers, M&S has benefited from robust consumer spending despite a cost of living crisis that has entered its second year, driven by 14 consecutive interest rate rises designed to tackle stubbornly high inflation.

But the high street stalwart has also benefited from its focus on providing high quality food, which has helped to win over shoppers who are less keen to dine out, and well-priced fashion ranges that are refreshed more regularly.

The unexpected statement, which promised “a significant improvement” against previous expectations when it publishes interim results in November, helped to raise the share prices of other retailers including Next and the owner of Primark.

Clothing group Next upgraded its profit forecast earlier this month, lifting it for the second time in three months.

M&S said in the first 19 weeks of the year like-for-like food sales grew over 11%, while clothing & home sales were up over 6% on the same basis. Group operating margin “continued to be robust”.

It did warn however that considerable uncertainties about the economic outlook remained, and there was a risk that the consumer market would tighten as the year progressed.

IN FASHION

Under CEO Stuart Machin, M&S is seeking to build a more resilient business with a focus on the quality and value of its clothing and food, heavy investment in technology and e-commerce, and a radical overhaul of its store estate.

Once the destination for most British households to buy school uniforms, bedding, food and underwear, M&S has for years struggled to win over younger, fashion-conscious customers while retaining its reputation for high-quality basics such as jumpers that is demanded by its older clientele.

But investments in the speed at which it can deliver new fashion ranges has won plaudits in the fashion press, helping a retailer that has a presence on most British shopping streets to regain a sense of style.

Investments to lower the price of certain food items, while also still offering high-quality wine and meal deals for those shoppers looking to stay at home more, has also boosted sales.

Clive Black at Shore Capital, the house broker, said sentiment around M&S had taken a long time to improve after other turnarounds failed to materialise, but he lifted his profit outlook by 9%.

(Reporting by James Davey in London and Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich, Kate Holton and David Evans)

By Samuel Indyk and Joice Alves

LONDON (Reuters) -Sterling rose against the dollar on Tuesday after data showed British wages grew at a record pace in the second quarter, adding to the Bank of England’s inflation worries, though gains were capped by some signs of a cooling labour market.

Wages excluding bonuses were 7.8% higher than a year earlier in the three months to June, representing the highest annual growth rate since comparable records began in 2001, the Office for National Statistics said.

Economists polled by Reuters had forecast a 7.4% rise.

But the data also showed some fresh signs of cooling in the job market with the unemployment rate unexpectedly rising to 4.2% from 4%, the highest since the three months to October 2021 and climbing more quickly than the BoE has forecast.

“It was the proverbial mixed bag with some weaker activity data but still no signs that weaker activity is starting to weigh on earnings growth,” said Adam Cole, chief currency strategist at RBC Capital Markets.

“Sterling is caught between the two and hasn’t had much of independent direction,” Cole added.

The pound was last 0.3% higher versus the dollar at $1.2723, but was little changed against the euro, with the euro last buying 85.97 pence.

The dollar index, which measures the currency against six peers including the pound and euro, was down 0.2%.

Money market traders are now fully pricing in a 25 basis point hike from the Bank of England at its September meeting, with around a 12% chance they raise rates by 50 basis points.

Traders also price a total of 75 basis points of tightening from the central bank by March next year, which would take the bank rate to 6%, on worries that higher pay growth will fuel prices further down the line.

“Wage growth in June accelerated … reinforcing concerns that second round inflationary effects have crystalized,” Lloyds Banking Group UK economist Emma Wilks said.

“The upside surprise in pay growth adds to concerns of persistent price pressures,” Wilks added, saying they expect another 25 basis point hike in September.

BoE Governor Andrew Bailey said earlier this month that the rate of pay growth was “materially above” the central bank’s forecasts but the BoE also signaled it was getting close to pausing its run of interest rate increases.

The next input for the BoE is inflation data for July, with consumer prices likely to have moderated further last month, official data is expected to show on Wednesday.

(Reporting by Samuel Indyk and Joice Alves, editing by Alun John and Emelia Sithole-Matarise)