Last week, US nonfarm payrolls showed that the labor market added 119k jobs in September, while the unemployment rate rose to 4.4% in September from 4.3% the month prior. Locally, the South African Reserve Bank (SARB) cut the repo rate by 25 basis points to 6.75% in line with our expectations.
International Market Developments
Last week, US nonfarm payrolls rose by 119K in September, rebounding from a revised 4K decline in August and beating market forecasts of 50K. It is the biggest job rise in five months, led by employment gains in health care (43K), including ambulatory health care services (23K) and hospitals (16K). The unemployment rate came in at 4.4%, the highest level since 2021. Importantly, the rise was due to a rise in the participation rate, which is a positive development. The September jobs report was originally scheduled for release on October 3rd but was delayed due to the longest federal government shutdown in US history.
Looking ahead, US producer prices are due for release on Tuesday.
Local Market Developments
Last week, the South African Reserve Bank (SARB) cut the repo rate by 25 basis points to 6.75%, as widely anticipated. The decision was unanimous, with officials agreeing that policy can now be eased amid a more favourable inflation outlook and balanced growth risks. Policymakers noted that inflation has accelerated somewhat over the past few months, reaching 3.6% for October, but they expect this to be temporary, with inflation remaining on track to meet the new 3% medium-term target. The inflation forecasts for 2025 and 2026 were slightly revised downward to 3.3% (from 3.4%) and 3.5% (from 3.6%), respectively. Regarding economic activity, the SARB raised its 2025 growth forecast to 1.3% (previously 1.2%) and maintained the 2026 projection at 1.4%. Looking ahead, the central bank noted that its Quarterly Projection Model continues to forecast gradual rate cuts as inflation subsides.
South Africa’s annual inflation rate rose for the second month to 3.6% in October from 3.4% in September. It was the highest reading since September 2024, mainly on account of prices of housing & utilities (4.5% vs 4.5% in September), notably electricity (8.2%) and water supply & other services (7%); alcoholic beverages & tobacco (4.5% vs 4.2%) and recreation & culture (3.4% vs 2.9%). Moreover, transportation prices rose 1.5%, marking the first increase in over a year, driven by a sharp rebound in fuels (3.3% vs -2.2%). Core inflation rate, which excludes food, non-alcoholic beverages, fuel, and energy, eased to 3.1% in October 2025 from a seven-month high of 3.2% in September.
Looking ahead, South Africa’s PPI inflation numbers for October are due to be released on Thursday. Markets expect annual PPI to have edged higher to 2.4% in October from 2.3% the month prior.