A survey by labour specialist Adcorp shows South Africa’s weak economy continued to shed jobs last month, with retrenchment levels at a 10-year high.

Adcorp’s Employment Index report on Monday showed that the economy shed 36,290 jobs last month, most of them in manufacturing and construction. The report tracks what happens to jobs on a monthly basis while the more official quarterly employment data is released by Statistics SA.

"The retrenchment rate is now at a 10-year high while the job mobility rate is at a 10-year low," Adcorp labour market economist Loane Sharp said.

Statistics SA will release fourth-quarter unemployment data today. In its last report, the agency estimated that 4.6-million people were unemployed in the third quarter, which is a quarter of those in employment and those actively seeking work.

The Adcorp report came as Standard Bank chief economist Goolam Ballim forecast that the economy would likely grow by 2.1% this year, less than the Reserve Bank’s 2.8% forecast and the Treasury’s 3%.

Mr Sharp said the economy needed to grow at 4% a year to absorb school leavers and new entrants to the job market.

Finance Minister Pravin Gordhan said in October that on an economic growth trajectory of 3%-3.5%, employment would grow 1.7% a year, which was "much lower" than what was required to cut unemployment.

Youth unemployment in particular is a big challenge, with the government implementing a youth wage subsidy despite opposition from some labour unions.

Weak economic growth and rising living costs could make workers go on strike for higher wages this year despite multiyear wage agreements having been concluded, Mr Ballim said.

"The potential (is) for agitation by labour as they see real income gains eroded and with the likelihood that the economy is going to underperform in 2014 … South Africa may see industrial disputes outside of what the diary suggests."

Supply-side constraints such as electricity interruptions and strikes were risks to the economic growth outlook, he said.

Like many other developing countries, South Africa faces massive unemployment but its situation is worse given its openness to global trade and local industries relying on global demand. The global recession almost six years ago and very low international demand saw the economy lose 1-million jobs.

Though most of these jobs have been recovered, new challenges have emerged as a wave of new entrants flood into the country’s labour market.

Mr Sharp said employment prospects should improve once South Africa’s economy grows more quickly, supported by higher global economic growth.

He said that there were measures authorities in the country could adopt while they wait for the benefits from improved global economic demand.

"These measures include labour-market reforms, growth-oriented monetary policy and a review of policies that are designed to support trade unions," Mr Sharp said.

An employment outlook survey of about 700 local businesses conducted during December by human resource consulting firm Manpower Group showed employers expected moderate opportunities for job seekers in this quarter. Their confidence was affected by strikes and still sluggish global demand.

Rising costs are also weighing on consumers and businesses, with the latest interest rate hike expected to add more pressure. The Bank raised interest rates by 50 basis points last month on concerns of higher inflation in the second quarter.

Mr Ballim said the Bank’s "alarming prognosis" on inflation might cause it to raise interest rates by another 100 basis points before the end of this year.

While the Bank would still consider the effects of interest-rate hikes on economic growth, it would likely be more concerned about rising inflation and its mandate of ensuring price stability, he said.

The Bank expected inflation as measured by the consumer price index to breach the upper end of the 3%-6% target range in the second quarter. The weak rand has been making the costs of inputs such as fuel more expensive, which adds to the bearish inflation outlook.

Mr Ballim said Standard Bank expected inflation to average 5.8% this year, lower than the Bank’s 6.3% forecast. Improving exports supported by a weaker rand and higher global demand and some moderation in import growth would see the current account deficit narrow to 5.2% of gross domestic product (GDP) this year and to 4.5% of GDP in 2015, Standard Bank said.