Johannesburg — SLOW and steady job creation continued in the fourth quarter of last year, Statistics SA's latest quarterly employment statistics show, with an additional 90000 people finding employment in the formal, nonfarming sectors of the economy.

The 1,3% increase from the previous quarter comes on the back of strong economic growth last year and is good news as government strives to bring down the 26,7% unemployment rate.

It was slightly higher than the 1,2% increase recorded in the third quarter.

However, it is not yet clear how much of the increase was seasonal in nature as some sectors, such as retail, hotels and restaurants and security, hire large numbers of casual workers in the run-up to and during the festive season.

Only when the figures for the first quarter of this year are released will it become clear how many of these jobs were retained.

The statistics are derived from a survey of 24000 businesses that are registered as taxpayers, as opposed to the more extensive Labour Force Survey, which is conducted among 30000 households every six months and provides the official unemployment rate.

The latest figures brought the increase in jobs last year to 2,2% -- or 158000 new positions from the end of 2004, which bodes well for the hoped-for improvement in the unemployment rate.

But last year's 4,9% growth in gross domestic product (GDP) might actually work against reducing unemployment.

As the economy grows strongly, more discouraged job seekers start actively looking for jobs, swelling the ranks of the unemployed in terms of the official definition, which excludes discouraged work seekers.

This happened in the year to last September, when the Labour Force Survey showed 658000 jobs were created but the unemployment rate rose to 26,7% from 26,2%. This was because the new jobs failed to keep pace with entrants to the job market, including about 636000 previously discouraged work seekers.

Economists welcomed the rise in formal-sector employment yesterday, saying it was an indication of how well the economy was performing. However, the manufacturing and mining sectors, which have been hurt by the relatively strong rand, were cause for concern.

The Stats SA figures show the mining sector shed 10000 jobs (2,3%) in the fourth quarter and ended the year with 22000 (4,8%) fewer jobs than at the beginning.

The manufacturing sector hired 10000 (0,8%) more people in the final quarter and 21000 (1,8%) during the course of the year, but Standard Bank economist Rashika Lalla pointed out that other survey data pointed to a likely decline in employment in manufacturing in the first six months of this year.

The Investec Purchasing Managers Index, a leading indicator of manufacturing activity, has shown a contraction in the sector in the first two months of this year.

The biggest job creator in the fourth quarter, Stats SA reveals, was the wholesale and retail trade and hotels and restaurant sector, which created 50000 jobs, an increase of 3,6% compared with the previous quarter. Construction added 11000 jobs (2,5%), while the financial, real estate and business services sector created 30000 positions, an increase of 2%.

"It's very encouraging and confirms how good things are going in this economy," said African Harvest Fund Managers economist Adenaan Hardien.