South Africa's economy shrank by 0.2% in the second quarter of 2026 and the official unemployment rate rose to 33.6%, according to Statistics South Africa (Stats SA), weakening the backdrop to Finance Minister Enoch Godongwana's mini-budget on 21 October.

The contraction followed 0.4% growth in the first quarter, according to the Stats SA release.

What shrank and what grew

Stats SA said three industries pulled output down in the second quarter:

Industry

Change

Contribution to growth

Trade, catering and accommodation

Stats SA said seven of ten manufacturing divisions fell, and that platinum group metals, manganese ore, gold and iron ore were the biggest drags in mining. Finance, real estate and business services (+0.3%), transport, storage and communication (+0.9%), general government services (+1.0%) and personal services (+0.6%) each added about 0.1 percentage points.

On the spending side, household consumption grew 0.4%, according to Stats SA.

Jobs and youth unemployment

Stats SA's labour force survey for the second quarter showed the official unemployment rate rising 0.9 percentage points from 32.7% to 33.6%. The number of unemployed people rose by 345,000 to 8.5 million, while employment fell by 16,000 to 16.7 million, Stats SA said.

Formal sector employment fell by 41,000. Informal sector employment rose by 34,000. Community and social services lost 57,000 jobs and mining 26,000, while trade added 70,000 and construction 39,000. The Western Cape (-48,000) and Gauteng (-22,000) lost the most jobs, and Mpumalanga (+41,000) gained the most.

For people aged 15 to 34, Stats SA said the number unemployed rose by 264,000 to 5.0 million and the youth unemployment rate rose 1.5 percentage points to 47.4%.

What we do not yet know

  • Whether the third-quarter figures will show a recovery. Neither release for that quarter is out yet, and we have not confirmed the dates.
  • Whether Treasury will change its growth forecast on 21 October. We have not seen a Treasury figure for 2026 growth.
  • The expanded unemployment rate for the quarter, which was not in the coverage we read.